US 30-year mortgage rates rise to 6.71%, reaching a new one-year high

U.S. housing affordability is facing a new round of pressure. Mortgage rates have climbed to their highest levels in more than a year, while renewed tensions in the Middle East are driving up energy prices, keeping inflation pressures elevated, and the uncertainty surrounding the Federal Reserve’s policy path remains unresolved.

Data released by Freddie Mac on Thursday showed that the average 30-year fixed mortgage rate in the U.S. rose to 6.71% this week, up from 6.66% last week, marking the highest level since July 2025.

The trend in mortgage rates is highly linked to U.S. Treasury yields, which have been rising recently due to several pressures.

On Thursday, Federal Reserve Governor Christopher Waller gave a speech indicating that recent inflation readings for the past two months show clear signs of easing, suggesting there may be no need for a rate hike at the September 15-16 meeting.

Influenced by these comments, the yield on the 10-year U.S. Treasury retreated to 4.744% on Thursday, after reaching 4.818% the previous day—its highest since November 1, 2023.

In his speech, Waller directly highlighted the impact of the current rate environment on ordinary families. He stated:

"Mortgage rates are not low, and auto loan rates are not low either. If I see the housing market struggling, and new cars are almost a luxury rather than a routine purchase for middle-class families—that is not an easy financial environment."

This statement reflects the reality facing American households. The issue of housing affordability continues to build against the backdrop of persistently high rates.

Measured by the Federal Reserve’s key inflation gauge, the Personal Consumption Expenditures Price Index (PCE), inflation has remained above the Fed’s 2% target for about five and a half years in a row, and intensified further earlier this year.

The rise in mortgage rates is being driven by the ongoing climb in U.S. Treasury yields.

Treasury yields have been fueled by several factors: market concerns that the government's borrowing may have exceeded its capacity to repay, companies investing heavily in artificial intelligence infrastructure leading to competition for capital, and escalating U.S.-Iran tensions potentially further raising inflation expectations.

The 10-year Treasury yield briefly jumped to 4.818% on Wednesday, setting a new high since November 2023, then eased after Waller’s speech on Thursday. However, future rate movements remain highly dependent on upcoming inflation data.

Waller indicated that if the August inflation numbers continue the recent cooling trend, he would be "comfortable" keeping rates steady at the September meeting. This language was more dovish compared to prior market expectations for a rate hike, triggering a short-term drop in Treasury yields.

However, Waller’s remarks are not a commitment—data remains the core variable in determining policy direction. For homebuyers, the mortgage market, and the broader housing industry, whether rates will meaningfully fall still depends on subsequent inflation data.