Perhaps this is just a psychological loss, but mortgage rates are now higher than they were a year ago.
If you look at rates last August, they were below current levels, per the daily rates tracked by Mortgage News Daily.
At last glance, a 30-year fixed averaged 6.75%, while its year-ago average was closer to 6.50%.
This is yet another blow to the housing market, which has struggled with affordability woes for several years now.
But there are a couple things that could get rates back below 2025 levels…
Mortgage Rates Are Now Above 2025 Levels
If you look at this chart from MND, you’ll see that mortgage rates are now above their year-over-year levels.
Back in August 2025, the 30-year fixed began dropping fairly precipitously and sizably.
It was around 6.60% in early August, then fell all the way to around 6.125% by mid-September.
The driver back then was a really weak jobs report, which threw the whole “resilient labor market” narrative into question.
There were actually a series of really bad jobs reports and massive downward revisions that pushed bond yields and mortgage rates lower.
While it was good news for rates, it wasn’t so wonderful for the wider economy.
But then labor somehow got better and we started getting some beats on the numbers.
In addition, the Iranian conflict broke out at the end of February and that’s really pushed mortgage rates higher.
They finally fell below 6% right before the war broke out, per MND, the first time they had done so since late 2022.
Since then, it’s been a very rocky road with the 30-year fixed up anywhere from 0.75% to 0.875%.
And importantly, rates now sit above their YoY levels and it the gap could widen as time goes on.
If you look at the chart, rates kept falling as the year went on so we could be up a half-point or more by next month compared to 2025 levels.
That would look pretty ugly. Especially for the Trump administration, which campaigned on lower mortgage rates and promised even better than we saw in the past.
Two Things Can Push Mortgage Rates Lower Again
I got to thinking and there are two main levers that can push mortgage rates lower, perhaps getting them back below 2025 levels.
It’s not going to be easy though since rates spent much of the second half of 2025 at 6.375% or lower.
The first one, which I’ve carried on about many times, is a resolution with Iran. That conflict explains most of the run up in mortgage rates over the past year.
Problem is even if it gets resolved, I assume some premium will remain entrenched in rates. They won’t go all the way back to where they were pre-war.
Some defensiveness will be baked into rates and it’ll be hard to fully remove it.
The second piece is labor, which complements the inflation tied to the war and higher oil prices.
Inflation and jobs are the dual mandate of the Fed and also what drive mortgage rates.
If we get more weak labor data again, mortgage rates can ease that way as well.
Some poor labor market data could be enough to sway the Fed to hold off on any expected rate hikes.
The Fed doesn’t set mortgage rates, but Fed rate expectations can play a role. And weak economic data is mortgage rate-friendly.
So those are basically the two things that can get mortgage rates back on track.
Of course, you don’t really want to root for jobs losses and higher unemployment.
That means the thing you should be rooting for if you want lower mortgage rates is an end to the conflict in Iran, an opening of the Strait of Hormuz, and dropping oil/gas prices.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 20 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on X for hot takes.
