Mortgage Rates Just Crossed 7% for the First Time Since January 2025. Should You Buy, Wait or Refinance?
- Freddie Mac's average 30-year fixed mortgage rate was 7.03% on September 24, 2026, up from 6.95% a week earlier and 6.30% a year ago. It's the first reading above 7% since January 2025.
- The 15-year fixed averaged 6.42%, up from 5.49% a year ago.
- Existing-home sales fell 2% in August to a 3.98 million annual rate. The median price was $429,100, up just 1.6% from a year earlier.
- Inventory rose to 1.62 million homes, or 4.9 months of supply, the highest level in more than 10 years.
- Mortgage rates track the 10-year Treasury yield, which hit 5.23% on Sept. 25, its highest since 2007.
The 7% line is back
Freddie Mac's weekly survey put the average 30-year fixed mortgage rate at 7.03% on Thursday, September 24. It's the first time the benchmark has been above 7% since January 2025, about 20 months ago.
A year ago, the same loan cost 6.30%. The 15-year fixed rate is now 6.42%, up from 5.49%.
Why mortgage rates jumped
Most people assume mortgage rates follow the Federal Reserve. They don't, at least not directly. Fixed mortgage rates follow the 10-year Treasury yield, which lenders use as a benchmark for long-term borrowing.
That yield hit 5.23% on September 25, its highest since 2007. High oil prices from the Iran conflict, above-target inflation, heavy government borrowing and talk of more Fed hikes all pushed it up. Mortgage rates usually sit about 1.5 to 2 points above the 10-year yield, so a 5%+ Treasury points to a 7%-ish mortgage.
For the full story on the bond market, see The 10-Year Treasury Hit 5.23%.
What 7% costs you, in dollars
Monthly principal and interest on a 30-year loan:
| Loan amount | At 6.30% (a year ago) | At 7.03% (now) | Extra per month |
|---|---|---|---|
| $300,000 | ~$1,857 | ~$2,002 | ~$145 |
| $400,000 | ~$2,476 | ~$2,669 | ~$193 |
| $500,000 | ~$3,095 | ~$3,337 | ~$242 |
That excludes property tax, insurance and HOA fees, which can add hundreds more.
The housing market is quietly shifting toward buyers
High rates are cooling demand, and that is changing the balance of power:
- Existing-home sales fell 2% in August to a 3.98 million annual rate, per the National Association of Realtors.
- The median price was $429,100, up only 1.6% from a year earlier. That's well below the rate of inflation.
- Inventory rose to 1.62 million homes, or 4.9 months of supply, the highest in more than a decade.
"Sellers who have been sitting are more willing to discuss what it will take to get a deal done," said Coldwell Banker CEO Kamini Lane. More supply means more room to negotiate on price, closing costs and repairs.
Should you buy, wait or refinance?
If you're buying: focus on the monthly payment you can comfortably afford, not the rate. Ask sellers for concessions, such as paying for a rate buydown. Many are more willing now. Keep 3 to 6 months of expenses in an emergency fund after closing.
If you're waiting for rates to fall: that's reasonable, but have a plan. When rates drop, buyers who were on the sidelines rush back, and prices can rise quickly. "Marry the house, date the rate" only works if you can afford the payment today. Never buy assuming you'll refinance later.
If you already own: refinancing makes sense only if your current rate is well above 7%, or you have an adjustable-rate mortgage about to reset higher. Most owners who bought or refinanced before 2023 have much lower rates and should keep them.
If you're investing: high rates squeeze homebuilders, mortgage lenders and real estate brokers. We cover the stock-market angle in Homebuilders and the Rate Trap.
What about Canadians?
Canadian fixed mortgage rates follow Government of Canada bond yields, which tend to move with US Treasuries. When US yields jump, Canadian 5-year fixed rates often follow within weeks. See How Bond Yields Set Canadian Mortgage Rates.
The honest uncertainty
If oil prices fall on a diplomatic breakthrough with Iran, Treasury yields and mortgage rates could drop quickly. If inflation stays sticky and the Fed hikes again in October, 7.5% is possible. Plan for the payment you can live with at today's rate, and treat any drop as a bonus.
Frequently asked questions
What is the average mortgage rate in September 2026?
Freddie Mac's weekly survey put the average 30-year fixed rate at 7.03% on September 24, 2026, and the 15-year fixed at 6.42%. Individual quotes vary with credit score, down payment and loan type.
Why did mortgage rates go above 7%?
Fixed mortgage rates follow the 10-year Treasury yield, not the Fed's overnight rate directly. The 10-year yield climbed to about 5.2% in late September on high oil prices, above-target inflation, heavy government borrowing and expectations of more Fed rate hikes.
Should I wait for mortgage rates to drop before buying?
Nobody can time rates reliably. Waiting may bring lower rates, but it can also bring higher prices and more competition when rates fall. If you find a home you can afford at today's payment, with a solid emergency fund, buying now and refinancing later if rates drop is a common approach. Don't stretch your budget on the assumption that you'll be able to refinance.
Is it a good time to refinance?
For most homeowners, no. If your current rate is below 7%, refinancing at 7% would raise your payment. Refinancing makes sense mainly for people with higher-rate loans, adjustable-rate mortgages about to reset, or those who need to consolidate expensive debt.
How much more does a 7% mortgage cost than a 6.3% mortgage?
On a $400,000, 30-year loan, principal and interest is about $2,669 a month at 7.03%, versus about $2,476 at 6.30%. That's roughly $193 a month, or about $2,300 a year.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 26, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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