The 30-year mortgage rate just surged past 7% for the first time in over a year

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A smaller-than-expected Treasury buyback announcement drove rates to their highest level in more than a year

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The 30-year fixed mortgage rate crossed above 7% on Wednesday, reaching its highest level since May 2025, according to Mortgage News Daily.

The move came after the government announced the size of its next Treasury buyback program, and the figure fell short of what markets had anticipated. Treasury buybacks can temporarily lift demand for government bonds and push yields — and by extension mortgage rates — lower. A smaller-than-expected announcement had the opposite effect, reducing anticipated demand and nudging rates higher.

Mortgage rates had already been at long-term highs before Wednesday's jump, according to Mortgage News Daily. Last week they stood at their highest point since June 2025; Wednesday's increase pushed them to a level not seen since May 2025.

The climb is the latest step in a months-long rise driven by investor concerns over inflation and the federal budget deficit. The 30-year rate stood at 6.85% as of last week — already the highest since June 2025 — up from 6.66% in late July and 6.50% a year ago, according to the Mortgage Bankers Association.

The pressure has been building since earlier this year. The 30-year U.S. Treasury bond hit a 19-year high in mid-August, touching 5.323%, as the 10-year Treasury yield crossed above 4.7% — well above the sub-4% levels that prevailed before the U.S.-Iran conflict began in late February. Consumer prices rose 3.4% year over year in July, well above the Federal Reserve's 2% target.

Borrowers have been responding to the higher fixed rates by gravitating toward adjustable-rate products. Adjustable-rate mortgages accounted for 8.5% of all mortgage applications last week, their highest share since June, up from 8% the prior week, according to the Mortgage Bankers Association. The average rate on a 5-year ARM stood at 5.82% last week, compared with 6.85% for a 30-year fixed loan.

Higher rates have weighed on overall mortgage demand. Total mortgage application volume fell 2.7% on a seasonally adjusted basis last week, with refinance applications down 6% and landing 25% below year-ago levels, according to the MBA. "Higher mortgage rates continue to weigh on prospective homebuyers looking to act, even as housing inventory has increased in many markets," Joel Kan, MBA's vice president and deputy chief economist, said in a statement.

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