Mortgage rates have smashed through 7% for the first time in a year, sparking fresh turbulence in the housing market. The 30‑year fixed‑rate average hit 7.07% on Thursday and rose to 7.12% on Friday, according to Mortgage News Daily.
Mortgage Rates Break 7% Barrier
The rate stayed above 6.5% every day since May 12, when it first crossed that threshold. Higher rates have slowed mortgage applications, with the weekly count down 2.7% ending Sept. 4, per the Mortgage Bankers Association.
Joel Kan, MBA deputy chief economist, said refinancing applications fell to their slowest weekly pace since May 2025. Purchase applications remained essentially flat, but more borrowers are shifting to adjustable‑rate mortgages, which reset after an initial fixed period.
Kan warned that high rates continue to weigh on prospective homebuyers even as inventory rises in many markets. The 10‑year Treasury yield has climbed since March, driving mortgage rates higher alongside bond markets.
The Federal Reserve kept its benchmark rate unchanged at 3.5‑3.75% for a fifth consecutive meeting in July, with the next decision slated for Sept. 15‑16. Traders see a roughly 70% chance the Fed will raise rates to 3.75‑4% at the upcoming meeting, according to the CME FedWatch Tool.
Buyers Gain Leverage in Seller‑Dominated Market
Redfin reports this is the strongest buyer’s market on record, with sellers outnumbering buyers by about 58% last month, the biggest gap in its history. The surge stems from a flood of new listings and stagnant demand, giving buyers greater negotiating power.
Demand Cools Amid Elevated Costs
Existing home sales slipped 2% month‑over‑month in August and 1.2% year‑over‑year, per the National Association of Realtors. Higher rates and tighter credit continue to curb buyer enthusiasm despite the favorable seller‑to‑buyer ratio.
