A recent Redfin analysis shows the share of U.S. mortgages with rates above 6% has reached its highest level in 10 years. This increase tripled the 2022 figure, significantly impacting the housing market.
The share of U.S. homeowners with a mortgage rate of at least 6% rose to 19.7% in the second quarter, the highest level since 2015, according to a new report from Redfin, the real estate agency powered by Rocket.
And with the average weekly mortgage rate hovering above 6% since September 2022, that share has been steadily growing, increasing by 0.8 to 1.4 percentage points each quarter over the past two years.
Causes of the Increase
Several factors explain the sustained rise in mortgage rates, which have remained above 6% since late 2022:
- Post-pandemic inflation: The Federal Reserve (Fed) raised the federal funds rate to combat high inflation, directly impacting mortgage loans.
- Treasury bond trends: Mortgage rates are tied to the yield on 10-year Treasury bonds, which has remained elevated due to concerns over the deficit and persistent inflation.
- Fed’s exit: The Fed’s gradual withdrawal from the mortgage-backed securities market has added further pressure on rates.
- Strong economic growth: A robust job market and overall economic growth drive credit demand, pushing rates higher.
Impact on the Housing Market
The rise in rates has led to several key effects on the housing sector:
- Decline in the “lock-in effect”: Many homeowners with older, low-rate mortgages (around 3%) had been reluctant to sell to avoid taking on a much more expensive new mortgage. With the increase in rates above 6%, this effect is beginning to fade, which could boost housing supply in the future.
- Limited inventory: Despite the slight decline in the “lock-in effect,” housing supply remains insufficient to meet demand, keeping prices high in many markets.
- Reduced affordability: High rates, combined with elevated home prices, make buying a home less affordable for many, significantly increasing monthly payments.
- Buyer decisions: A September 2025 report from Fannie Mae projects mortgage rates could dip below 6% by the end of 2026, which may influence consumer buying decisions in the coming years.
Future Outlook
While rates are expected to remain elevated for some time, some experts forecast a gradual decline.
- Fannie Mae projects the average 30-year mortgage rate could end 2025 in the high-5% range, with a further drop in 2026.
- The pace of this decline will depend on the Fed’s response to inflation and other economic indicators.
