The 30-year fixed mortgage rate climbed to 6.71 percent for the week ending Sept. 3. It was its highest level since late July 2025, as a global bond sell-off tied to renewed fighting in the Middle East pushed borrowing costs higher across the board.
Mortgage rates are up five basis points from 6.66 percent the week before, according to Freddie Mac, and 21 basis points above where rates stood a year ago.
The move tracks a broader bond rout sparked by inflation fears after a fresh round of U.S. airstrikes against Iranian targets this week, the latest escalation in a conflict that’s been steering mortgage pricing since it broke out in late February.
“The 30-year fixed-rate mortgage averaged 6.71 percent this week,” Freddie Mac Chief Economist Sam Khater said. “Purchase demand has remained relatively stable, indicating steady interest from buyers adapting to evolving market conditions.”
A month of progress, undone
The mechanism here is familiar to anyone who’s watched rates whipsaw over the past several months.
Kevin Warsh
Oil prices rise on geopolitical risk, inflation expectations follow, and the 10-year Treasury yield — the benchmark mortgage rates track most closely — gets bid up in response. Oil is now pushing toward $100 a barrel, and the 10-year yield hit its highest level since January 2025 on Tuesday.
It’s a reversal from where things stood a month ago. When the conflict looked like it was cooling off in August, yields and mortgage rates eased along with it. This week’s airstrikes undid that progress.
Fed Chairman Kevin Warsh added to the pressure in his address at the Jackson Hole, Wyoming, economic conference last week.
Warsh reiterated that inflation has run too high for too long and that the policy rate remains the central bank’s primary lever for bringing it down. He stopped short of committing to a specific move.
“If the Fed gets inflation wrong and judges the economy wrong, who gets the worst of it? Not the financial high-fliers,” Warsh said last week. “Hard-working Americans are the ones left to deal with inflation that is too high or jobs that suddenly appear less secure.”
As of Thursday, traders were pricing in roughly even odds of a rate hike at the Fed’s September meeting.
‘The pain will be real’
For real estate agents and loan officers fielding buyer questions, the near-term outlook isn’t encouraging.
Jiayi Xu
“We don’t expect any real mortgage rate relief this fall,” Realtor.com Economist Jiayi Xu said. “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.”
Xu frames the risk as a pincer. Affordability gets squeezed by higher rates on one side, and by softer real income growth on the other. It’s a combination that could dampen homebuyer willingness even where buyers can technically still qualify.
Rates aren’t the only variable moving, though.
Home prices have kept declining, and the share of listings with price cuts is at its highest point this year. It’s evidence that sellers are adjusting to a market with less pricing power than they had a year or two ago.
Xu noted sellers haven’t pulled back from listing despite that dynamic.
The delisting share remains well below year-ago levels, and active inventory is still running higher than it was at this point last year. It’s a sign that, so far, elevated rates haven’t been enough to freeze the market the way they did during past spikes.
Whether that holds through the fall likely comes down to what the Fed does next and whether the Iran conflict shows any sign of de-escalating again.
By the numbers
The data listed below explains the recent changes in mortgage rates:
- Mortgage rates hit a 13-month high. The average rate on a 30-year fixed mortgage rose to 6.71 percent for the week ending Sept. 3. That was up five basis points from 6.66 percent the previous week and the highest since late July 2025, according to Freddie Mac. A year ago, rates averaged 6.50 percent.
- Will an interest rate hike happen? As of Thursday, traders were pricing in roughly 50-50 odds of an interest rate hike at the Federal Reserve’s September meeting.
- Yields hit a new high. The 10-year Treasury yield — the key benchmark for mortgage rates — climbed to its highest level since January 2025 on Tuesday.
