Benchmark mortgage rate tops 7 percent, highest in 2 years

The average 30-year mortgage rate has surpassed 7 percent, marking the first time it has done so since January 2025.

The benchmark 30-year fixed mortgage rate is 7.03 percent this week, up from 6.95 percent last week, according to data from Freddie Mac.

It marks the fifth-consecutive weekly rise in mortgage rates, and the first time it has reached 7 percent since the week ending Jan. 16, 2025 — days before President Trump returned to office.

Mortgage rates still have a ways to go before reaching the 25-year high of 7.79 percent reached in October 2023. But with inflation remaining above the Federal Reserve’s 2 percent target and the Iran war continuing to push up energy prices , analysts expect home borrowing costs to remain elevated.

“Expect 7% as the new normal. Job additions will be the one factor that can support homebuying,” National Association of Realtors Chief Economist Lawrence Yun wrote last week .

To combat inflation, the central bank raised interest rates last week by a quarter point , to a range of 3.75 percent to 4 percent.

Fed Chair Kevin Warsh said after the decision that hiking rates would “support a timelier return” to 2 percent annual inflation, noting this summer’s inflation data do not indicate that “underlying trends have meaningfully improved.”

Multiple central bank officials have also forecasted future rate hikes this week, with the Federal Open Market Committee (FOMC) scheduled to meet again in late October.

“Looking ahead, if conditions evolve as I expect, some modest further tightening may be warranted,” Philadelphia Fed President Anna Paulson said Thursday at a financial technology conference.

Trump has urged the FOMC to slash interest rates, which indirectly impact mortgage rates. But 30-year mortgage rates closely follow the 10-year U.S. Treasury bond yield , which has reached a 19-year high.

As of early Thursday afternoon, the 10-year bond yield is up roughly 3 basis points to around 5.14 percent.

The note has increased by more than a full percentage point since the day before the U.S. and Israel launched the Iran conflict in late February. That tracks with a similar rise in the average 30-year mortgage rate, which was 5.98 percent the week before the war started.