MCLEAN, September 18 — The average rate on a 30-year fixed-rate home loan climbed to 6.95% this week, up from 6.76% a week earlier and 6.26% a year ago, Freddie Mac reported Thursday. That is the highest level since January 2025, and it lands the same week the Federal Reserve raised interest rates over persistent inflation. The bottom line: borrowing costs are rising, and the housing market is already slowing in response.
The 30-year fixed rate is the most widely used benchmark for U.S. home lending, and Freddie Mac has published its weekly Primary Mortgage Market Survey since 1971. The move to 6.95% extends a run-up from 6.26% a year earlier — a gap of roughly 0.69 percentage points.
Construction data points the same direction
The rate increase came one day after the Fed’s decision. On the same day Freddie Mac released its numbers, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development published the new residential construction report for August. All three measures in it declined: building permits, housing starts, and housing completions.
Together, the rate and construction figures add to concerns about a U.S. housing market slowdown. The construction report reflects weakening demand in the face of widespread affordability challenges.
Idaho realtor Tara Heinz told Scripps News Group this week that prospective buyers are making careful decisions in this climate. “It’s going to take a lot of motivation to actually make a move right now,” Heinz said. “It’s got to make sense, because the numbers are a lot higher, so it’s taking a lot more strategizing in order to get a payment that’s going to work for the family.”
Political pressure and the inflation backdrop
The Fed raised rates despite pressure from President Trump to cut borrowing costs. Separately, gas prices and food prices are up, and experts point to the war with Iran as a primary cause for recent cost of living increases. Trump has called the fighting and the financial strain “temporary.” “That war is going to end very soon,” Trump told a crowd at a campaign rally in North Carolina Wednesday.
“Watch, you just watch.” Investors will note the sequence here. The Fed acted on inflation, the mortgage benchmark followed within a day, and the August construction numbers landed alongside both.
What to watch next: whether the 30-year fixed rate holds above 6.95% in Freddie Mac’s next weekly reading, and whether the September construction report shows permits and starts stabilizing or extending August’s declines.
