What happened to mortgage rates this week
The Freddie Mac 30-year mortgage rate surged 5 basis points higher this week to 6.86%, mirroring the rise in 10-year Treasury yields following the U.S. credit downgrade. Concerns about tariffs and the growing U.S. debt burden have raised doubts about whether U.S. Treasurys remain a safe-haven asset. As a result, yields rose as investors reassessed the risk of holding U.S. debt. Since mortgage rates closely track the 10-year yield, this upward pressure has translated into increased borrowing costs for homebuyers, which means higher mortgage rates.
What it means for the housing market
High mortgage rates continue to pose a significant challenge for homebuyers. The “lock-in effect”—where current homeowners are reluctant to sell and give up their lower mortgage rates—has led many to postpone listing their homes. While buyers now have access to more new listings compared to a year ago, overall active inventory remains well below typical pre-pandemic levels, making it difficult for many to find a home that fits their needs. At the same time, elevated mortgage rates and rising home prices are further straining affordability. According to a recent Realtor.com survey, nearly two in five homebuyers cited budget constraints as a major barrier to homeownership.
On a more positive note, for those who are moving forward with their home search, today’s slower-paced housing market may feel less stressful. Increased inventory, relatively stable prices, and longer days on the market are easing some of the competitive pressure. In fact, only 7.7% of home shoppers in Q1 2025 cited concerns about overbidding—down from 10.4% during the same period last year.