30-Year Mortgage Rate Climbs to 6.89%, Housing Slump Deepens

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30-Year Mortgage Rate Climbs to 6.89%, Housing Slump Deepens/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ The average U.S. 30-year mortgage rate has risen to 6.89%, marking its highest level since early February, according to Freddie Mac. Elevated borrowing costs continue to dampen housing demand, with pending home sales and mortgage applications both declining. Experts warn that without a significant drop in interest rates, the housing market could face a prolonged slowdown.

FILE – A housing development in Cranberry Township, Pa., is seen on March 29, 2024. (AP Photo/Gene J. Puskar, File)

Mortgage Spike: Quick Looks

30-year mortgage rate now averages 6.89%, up from 6.86% last week.
15-year mortgage rate also rises to 6.03% from 6.01%.
This is the highest 30-year rate since Feb. 6, matching early 2025 peaks.
Bond yields, driven by inflation and Trump’s tariff unpredictability, are key rate influencers.
10-year Treasury yield at 4.43%, down slightly from 4.47%.
Mortgage applications dropped 1.2% last week, reflecting buyer hesitation.
Pending home sales fell 6.3% in April and 2.5% year-over-year.
Homebuyer affordability crisis persists, despite more listings entering the market.
Experts predict continued mortgage rate volatility through 2025.

Deep Look: 30-Year Mortgage Rate Climbs to 6.89%, Deepening Housing Woes

WASHINGTON, D.C. — The U.S. housing market just got another dose of bad news. The average interest rate on a 30-year fixed-rate mortgage rose to 6.89% this week, its highest level since early February, according to mortgage giant Freddie Mac.

The increase from last week’s 6.86% keeps mortgage rates hovering near the year’s peak and continues a three-week upward trend. For context, this time last year, the average rate stood at 7.03%, just slightly above current levels.

Rates on 15-year fixed mortgages — a popular option among homeowners seeking to refinance — also edged higher, from 6.01% to 6.03%. While still below the 6.36% seen a year ago, the rise is significant for those closely watching refinancing costs.

What’s Driving the Surge?

Mortgage rates are largely tied to the 10-year Treasury yield, which in turn reflects investors’ views on inflation, government spending, and geopolitical stability.

This week, the 10-year yield was 4.43%, down from 4.47% on Wednesday. Analysts say part of the upward pressure on bond yields stems from market fears over exploding federal debt and the Trump administration’s shifting tariff policies, which have spooked markets.

The volatility and lack of clarity around U.S. trade moves have also made it difficult for mortgage lenders to price loans with confidence — often erring on the side of caution and pushing rates higher.

Home Sales Continue to Stall

Higher borrowing costs are shrinking affordability, particularly for first-time buyers. According to the National Association of Realtors (NAR), pending home sales — a leading indicator of future closed sales — dropped 6.3% in April compared to March, and are down 2.5% year-over-year.

That’s despite rising inventory, which would usually boost homebuyer activity during the spring selling season. But higher rates appear to be erasing any potential gains.

“At this critical stage of the housing market, it is all about mortgage rates,” said Lawrence Yun, NAR’s chief economist. “Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”

Mortgage Applications Also Falling

The Mortgage Bankers Association (MBA) reported that overall applications were down 1.2% last week. Purchase applications — loans made to buy homes rather than refinance — are up 18% from a year ago, but that gain is modest compared to what’s typically seen during peak home-buying season.

Many economists blame the current malaise on rate lock-in, where would-be sellers stay put because they don’t want to give up existing low-interest mortgages secured during the pandemic.

What’s Next for Mortgage Rates?

Economists say don’t expect much relief soon. Projections suggest the 30-year mortgage rate could stay between 6% and 7% throughout the rest of 2025. And with the Federal Reserve holding off on rate cuts until clear signs of inflation moderation appear, mortgage rates could remain elevated longer than expected.

Some optimism remains — if the Fed decides to pivot to cuts in late 2025, or if inflation data shows persistent softening, that could bring relief.