US mortgage rates rise to 6.85%, highest in more than a year

[NEW YORK] US mortgage rates climbed to a more than one-year high last week, extending a steady rise in borrowing costs since the start of the Iran war.

The contract rate on a 30-year mortgage rose 6 basis points to 6.85 per cent in the week ended Sept 4, according to Mortgage Bankers Association data released on Wednesday (Sep 9). The rate on a five-year adjustable mortgage, however, dropped to 6.13 per cent.

Prior to the start of the Iran war at the end of February, rates had fallen to the lowest level since 2022. Since then, they’ve moved up by about three quarters of a percentage point as the conflict pushed up energy prices and stoked inflation concerns.

Higher borrowing costs have tamped down demand for loans. MBA’s refinance index, a measure of loan applications, fell 6.2 per cent to its lowest level since May 2025. The MBA purchase index slipped 0.2 per cent from the prior week.

US consumer price data out on Friday is expected to show headline inflation rose 3.4 per cent in August from a year earlier, boosted by rising energy costs. Federal Reserve officials are closely tracking inflation data as they weigh their next move on interest rates.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG