Mortgage rates start 2025 near 7%, hitting highest level since July

Mortgage rates rose again last week, leaving them near 7% to start the year.

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The average 30-year fixed-rate mortgage rose to 6.91% in the week through Wednesday, from 6.85% as of Dec. 26, according to Freddie Mac data. 15-year mortgage rates jumped to 6.13% from 6% a week earlier.

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“Inching up to just shy of 7%, mortgage rates reached their highest point in nearly six months,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Compared to this time last year, rates are elevated and the market’s affordability headwinds persist.”

It’s the third straight week of rate gains, and the highest level since July.

Factors like high rates and elevated home prices that have shut many prospective buyers out of the market show no sign of easing for now. But there are signs that some buyers are pushing ahead with home purchases despite affordability challenges: Housing contract signings rose in November to reach the highest level since early 2023, according to the National Association of Realtors.

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Demand for mortgages in the final week of 2024 fell sharply, a combination of holiday market slowness and rates near 7%, according to the Mortgage Bankers Association.

Applications to purchase a new home fell 13% through Friday compared to two weeks earlier, while refinancing applications were down 36%. The results include an adjustment for the Christmas holiday.

Late December is typically one of the seasonally slowest times for the housing market as buyers and sellers pause amid the holidays and colder weather.

Claire Boston is a senior reporter for Yahoo Finance covering housing, mortgages, and home insurance.