US Mortgage Rates Climb to Highest Level Since August 2025 as Loan Demand Weakens

The average rate on a 30-year fixed mortgage in the United States climbed to its highest level since August 2025 last week, adding further pressure to an already fragile housing market as borrowing costs continue to rise.

According to the Mortgage Bankers Association, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less increased to 6.65% in the week ending May 22, up from 6.56% the previous week. The increase marked the fifth consecutive weekly rise in mortgage rates.

The move comes as Treasury yields remain elevated amid persistent inflation concerns tied to higher fuel prices and expanding global public debt levels. Investors have increasingly scaled back expectations for Federal Reserve rate cuts in 2026, with some market participants now pricing in the possibility of an additional interest rate increase before year-end.

Higher borrowing costs quickly translated into weaker housing finance activity.

Mortgage applications fell 8.5% during the week, marking the sharpest decline in nearly two months, according to the MBA’s Weekly Mortgage Applications Survey. Refinancing activity was particularly affected, with refinance applications plunging 18.1% from the prior week. Applications for home purchases also edged lower, declining 0.4%.

The latest data highlights the sensitivity of the US housing market to financing conditions as elevated rates continue to challenge affordability for prospective buyers. Housing demand has remained uneven throughout 2026, with many consumers delaying purchases or refinancing decisions amid uncertainty surrounding inflation, monetary policy, and broader economic conditions.

Analysts continue to monitor Treasury market volatility and upcoming inflation data for signals on the future direction of mortgage rates, which remain closely tied to expectations around Federal Reserve policy and long-term government bond yields.