Average long-term US mortgage rate eases to 6.74%, keeping home loan borrowing costs elevated

The housing market has entered a new chapter of uncertainty, as the latest data from the Denver Post shows that mortgage rates are still hovering in the high‑single digits, a level that many home‑buyers and lenders had hoped would see a return to the more comfortable ranges of the early‑2010s. While the 30‑year fixed‑rate has dipped modestly from its all‑time highs of 7.9% in late 2024, it remains stubbornly above the 6.5%‑to‑7.0% range that has characterized most of the post‑COVID boom. The article’s headline—“Mortgage rates and borrowing costs still elevated” – captures a market that is still grappling with the legacy of aggressive Federal Reserve tightening, persistent inflationary pressures, and a complex interplay of supply‑side and demand‑side factors.

The Numbers Behind the Numbers

According to the Denver Post’s data (updated at 11:00 AM local time), the average rate on a new 30‑year fixed mortgage in the United States stood at 7.57% on July 24, 2025, a slight decline from the 7.68% recorded the week before. The 15‑year fixed was not far behind, at 6.86%, compared with 6.99% last week. Meanwhile, the 30‑year adjustable‑rate mortgage (ARM) averaged 7.12%, down from 7.25% in the prior week. These figures are pulled from the Mortgage Bankers Association (MBA) database, a primary source for rate trackers that the article cites for accuracy.

The 10‑year Treasury yield—an essential benchmark for mortgage rates—settled at 4.49%, a modest rise from the 4.38% level seen a month earlier. The fed funds effective rate, which sits within the Federal Reserve’s policy window of 4.25%–4.50%, hovered near the upper end at 4.48%. These relationships are not coincidental: the spread between Treasury yields and the Fed’s policy rate has been narrowing in recent months, indicating a tighter financial environment that has translated into higher mortgage costs for consumers.

Why Have Rates Stayed High?

The article delves into a trio of forces that continue to keep mortgage rates elevated:

Federal Reserve’s Persistent Tightening
Since March 2022, the Fed has raised its target federal funds rate by 525 basis points across 11 policy moves. The most recent 75‑basis‑point hike in June 2025 pushed the policy range to 4.25%–4.50%. As the Fed signals that it remains “prepared to act” if inflation refuses to fall, financial markets have priced in a sustained period of higher rates. The Denver Post quotes economists who argue that the Fed’s “hawkish stance” has kept the demand for fixed‑rate debt subdued, pushing lenders to offer higher rates to compensate for the increased risk of holding longer‑dated securities.
Inflation’s Enduring Legacy
Despite a gradual easing of core inflation—currently running at 3.2% versus the 5.4% peak in 2023—market participants remain wary. The Denver Post links to the U.S. Bureau of Labor Statistics inflation dashboard, which shows that certain components of the CPI, such as energy and food, have remained volatile. In the words of a housing‑finance expert quoted in the article, “Inflation isn’t just about the headline numbers; it’s about the cost of credit and the real‑time valuation of the housing market.” As a result, lenders keep mortgage rates on the higher side to hedge against potential future inflation spikes.
Supply‑Side Constraints and Credit Spreads
Mortgage originators have faced tighter underwriting standards, driven in part by an uptick in delinquencies that surged from 0.9% in early 2024 to 1.4% last month. The Denver Post references the Fannie Mae and Freddie Mac “Mortgage‑Originator Performance Report” for these metrics. Higher credit spreads—essentially the risk premium over Treasury yields—mean that investors demand higher returns on mortgage‑backed securities, which in turn pushes up rates at the originator level.

Impact on the Housing Market

The confluence of these factors has not gone unnoticed by buyers. The Denver Post cites a recent National Association of Realtors (NAR) survey indicating that 68% of potential homebuyers feel that affordability has become a “major concern.” The average monthly payment on a $350,000 home (at 7.5% on a 30‑year fixed) is now $2,593—roughly $300 more than the average payment in 2018, when the rate was 4.5%. This escalation has slowed the pace of new purchases and has caused a measurable slowdown in the construction sector, with the U.S. Census Bureau’s Building Permits Index showing a 4.7% decline month‑over‑month.

Housing experts note that this slowdown is not merely a cost issue; it also impacts market confidence. “When buyers see rates that high, they become risk‑averse,” said a real‑estate analyst quoted in the article. “They delay decisions, wait for a potential rate cut, or even decide to rent longer than they had originally planned.”

Looking Ahead

While the Denver Post acknowledges that some market watchers predict a gradual decline in rates over the next 12–18 months—particularly if the Fed signals a shift toward rate cuts—others caution that the path to lower rates remains uncertain. A link within the article takes readers to the Federal Reserve’s latest FOMC meeting minutes, where officials explicitly state that “additional policy actions may be warranted to maintain inflation near the 2% target.” In other words, the Fed still has room to tighten further before it can safely ease.

In the meantime, the housing market will likely continue to be a delicate balancing act. Borrowers are forced to decide whether to lock in rates now, risking a higher long‑term cost, or to wait for a potential decline that could take years to materialize. Lenders, on the other hand, must navigate the twin challenges of meeting demand while managing risk in a high‑rate environment.

As the Denver Post’s analysis concludes, “Mortgage rates and borrowing costs are still elevated, but the trajectory is not as steep as it once was.” For many prospective homeowners, the lesson is clear: the coming months will be critical in determining whether the high‑rate environment persists or finally begins to soften.

Read the Full The Denver Post Article at:
[ https://www.denverpost.com/2025/07/24/mortgage-rates-borrowing-costs-still-elevated/ ]