US fixed 30-year mortgage rate climbs to highest since June 2025

Sept 9 (Reuters) - The rate ‌on the most ​popular ​U.S. home loan rose last week to its highest in more than 14 months, as escalating hostilities in the Middle ‌East drove up oil prices, fueling inflation concerns and pushing ⁠up U.S. Treasury yields that underpin residential borrowing costs.

The average 30-year fixed-rate mortgage rose 6 ‌basis points to 6.85% in ‌the week ended September 4, the Mortgage Bankers Association said on Wednesday. It was last higher in June 2025.

Mortgage rates track U.S. ​Treasury yields, which have risen in recent weeks on concerns about rising federal debt that topped $40 trillion in August, as well as because ⁠of competition for capital from companies building AI-related infrastructure, and worries the U.S.-Iran conflict will worsen ​inflation that has been running above the Fed's 2% goal for 5-1/2 years.

The rise in mortgage rates has choked ​off refinancing, which fell 6.2% from a ‌week earlier, the MBA said. Mortgage applications, which include applications for purchases as well as refinancing, dropped 2.7% from ⁠the prior week, the MBA said.

There is little to suggest relief for prospective homebuyers is in sight, with the 10-year Treasury yield on Tuesday approaching 4.8%, near ⁠its highest level since October 2023.

A pair of closely watched inflation readings later this ​week — the producer price index on Thursday and the consumer price index on Friday — will likely shape the outcome of the Federal Reserve's rate-setting meeting on September ‌15 to 16, another factor in how mortgage rates will evolve.

Traders for now are betting a Fed rate hike ‌is more likely than a continued hold, though cooler inflation readings could ⁠easily shift that perception. Either ‌way, there is no indication ​the Fed will deliver the interest-rate cut that President Donald Trump has called for.

(Reporting by Ann Saphir; Editing by ‌Chris Reese)

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