US mortgage rates climb to 6.81% as demand falls

Average U.S. mortgage rates have climbed to their highest level in over a year, curbing demand for home loans and adding pressure to an already subdued housing market. The average rate on a 30-year fixed-rate mortgage reached 6.81% for the week ending July 31, according to data from the Mortgage Bankers Association, marking the highest point since July 2025. Other industry surveys confirm the upward trend, with Freddie Mac reporting an average rate of 6.66% as of July 30.

The rise in borrowing costs is directly impacting consumer activity. Mortgage applications fell 6.4% for the week ending July 31 compared to the prior week, with refinance applications plunging by 10%. Purchase applications also declined, reaching a five-month low. This drop in demand marks a shift, with application volumes now trailing behind levels from the same period last year.

Analysts point to a confluence of economic and geopolitical factors driving rates higher. Mortgage rates loosely track the yield on the 10-year Treasury note, which recently climbed to its highest level since early 2025. This increase reflects investor anxiety that persistently high inflation will lead the Federal Reserve to maintain...