Mortgage rates near 6.7% are the new normal, and housing policy hasn't caught up

The 30-year fixed mortgage rate averaged 6.71% this week, according to Freddie Mac's Primary Mortgage Market Survey, up from 6.66% the week before and higher than the 6.50% recorded at this point a year ago. It is worth sitting with that last comparison. A full year of Federal Reserve policy deliberation, a presidential election cycle's worth of housing promises, and countless forecasts calling for relief have passed, and mortgage rates are not lower than they were — they are higher. That ought to settle, once and for all, the question of whether 6-plus-percent mortgages are a temporary anomaly or simply the new baseline American homebuyers must plan around.

The forecasts keep moving the goalposts, not the number

The Mortgage Bankers Association's latest projections, cited widely across housing coverage this year, put 30-year rates at an average of roughly 6.4% for 2026 and 6.3% for 2027 — nowhere near the sub-5% rates that defined the 2010s, and not even reliably below 6%. Other forecasters, including Fannie Mae's own housing forecast, have at times sounded more optimistic, but none of the major housing economists is currently projecting a return to anything resembling pandemic-era borrowing costs. Data from the Federal Reserve Bank of St. Louis tells the same story in longer form: the 30-year average has held in a roughly 6% to 7% band for more than two years now, an unusually long stretch of stability at an elevated level, rather than the sharp cyclical swing many buyers are still waiting for.

This week's uptick had a proximate cause — renewed US-Iran tensions in the Gulf pushed Treasury yields higher over the past several days, and mortgage rates, which track those yields closely, followed. But the broader trend is not about any single week's headlines. It is about a labor market that keeps outperforming expectations, most recently with August's report of 162,000 new jobs against forecasts closer to 55,000, and a Federal Reserve whose own governors are now debating whether the next move on rates ought to be a hike rather than a cut. Christopher Waller's remarks this week that "it may not take much acceleration in inflation" to push him toward supporting tighter policy are not the words of a policymaker preparing to hand mortgage borrowers relief anytime soon.

What that means for housing policy

Freddie Mac's chief economist, Sam Khater, noted that purchase demand has "remained relatively stable," which is true, but stability at these rates is its own kind of story. Buyers have adapted by taking on higher monthly payments, stretching budgets, or simply staying out of the market altogether — not by rates coming down to meet them. First-time buyers, whose position the National Association of Realtors tracks closely, remain the most squeezed group in this arrangement, competing for a limited supply of homes at borrowing costs that would have seemed extraordinary a decade ago.

Housing policy in Washington, at both the federal and state level, has largely been built around an assumption that rates would eventually normalize back toward pre-2022 levels, easing pressure on affordability without requiring more direct intervention on supply, zoning or construction costs. Three years into the current rate environment, with forecasters now describing 6.3% to 6.5% as the expected range through 2027, that assumption looks increasingly like wishful thinking rather than a policy plan. The mortgage market has adjusted to the new normal. It is past time for housing policy to do the same, rather than continuing to wait on a rate cut that current data give little reason to expect soon.