The average rate on 30-year fixed mortgages climbed to 6.71% for the week ending Sept. 3, up 5 basis points from last week.
Mortgage rates surged to their highest level in more than a year this week after the global bond market was roiled by a large-scale sell-off fueled by renewed inflation fears related to a fresh round of hostilities in the Middle East.
The average rate on 30-year fixed home loans increased to 6.71% for the week ending Sept. 3, up 5 basis points from 6.66% the previous week and the highest since late July 2025, according to Freddie Mac. For perspective, rates averaged 6.50% one year ago.
"The 30-year fixed-rate mortgage averaged 6.71% this week," says Sam Khater, Freddie Mac's chief economist. "Purchase demand has remained relatively stable indicating steady interest from buyers adapting to evolving market conditions."
Mortgage rates have been climbing since the outbreak of the U.S.-Iran conflict in late February. The ongoing conflict has put upward pressure on oil prices, driving up inflation and pushing it further from the Federal Reserve's 2% target.
When the conflict appeared to be nearing resolution last month, bond yields declined—and mortgage rates followed suit.
However, recent escalation in the fighting, culminating in a new round of U.S. airstrikes against Iranian targets this week, has driven oil prices closer to $100 a barrel, resurrecting inflation concerns.
As a result, the 10-year Treasury yield—the key benchmark for mortgage rates—on Tuesday climbed to its highest level since January 2025.
In his inaugural address at the Jackson Hole economic conference last Friday, Fed Chairman Kevin Warsh doubled down on the view that inflation has run too high for too long, and that the policy rate remains the central bank's primary tool to bring it back down.
Notably, Warsh acknowledged that the Fed must act to tame inflation but would not commit to any specific action.
As of Thursday, traders see a roughly 50-50 chance of a rate hike at the September meeting of the Federal Open Market Committee (FOMC).
"We don't expect any real mortgage rate relief this fall," says Realtor.com® economist Jiayi Xu. "But if inflation isn't tamed, the pain will be real. Higher inflation would simultaneously erode paychecks and real income growth while keeping mortgage rates elevated for longer."
The outcome of this dynamic, according to Xu, would be a squeeze on housing from both sides: what people can afford, and what they are willing to buy into.
Still, there's some good news for buyers this year: Home prices continue to decline, and the share of listings with price cuts is at its highest level this year, a sign that good deals are out there.
"Meanwhile, sellers aren't retreating either," says Xu. "The delisting share is much lower than what we saw last year, while active listings remain higher than year-ago levels."
(Realtor.com) How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.