US mortgage rates rise to 6.81%, highest level in a year

(Aug 5): US mortgage rates rose last week to the highest level in a year, curbing demand for home loans in an already subdued housing market.

The contract rate on a 30-year mortgage rose five basis points to 6.81% in the week ended July 31, according to Mortgage Bankers Association (MBA) data released on Wednesday. 

Rates fell to their lowest levels since 2022 towards the end of February, just before the start of the Iran war. Since then, they’ve trended higher as the conflict pushed up energy prices and stoked inflation concerns.

The result has been weaker demand for loans. MBA’s purchase index, a measure of loan applications, fell 3.6% from the prior week to a five-month low, while its refinancing index slid 1.9% to the lowest since mid-2025.

US mortgage rates rose last week to the highest level in a year, curbing demand for home loans in an already subdued housing market.

The Federal Reserve last week further complicated the outlook for borrowers. The central bank held its benchmark interest rate steady, as expected. But chairman Kevin Warsh’s post-meeting press conference raised concerns about the Fed’s commitment to its 2% inflation goal. In response, investors pushed bond yields higher.

Mortgage rates closely track the yield on 10-year Treasury notes. At the end of July, 10-year yields touched their highest level since early 2025.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

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