Mortgage Rates Climb on December 7, 2025, Pushing Refinancing Activity to Multi-Month Lows

Mortgage interest rates climbed sharply on December 7, 2025, as the 30-year fixed rate hit 7.45%, marking a 0.3-point increase from the previous week. The 15-year fixed mortgage rate followed suit, rising to 6.82%, the highest level since September. These movements reflect growing market expectations of sustained inflation pressures and a resilient labor market, which have weighed on long-term bond yields. The rise in borrowing costs comes amid a broader financial market shift. The 10-year U.S. Treasury yield, a key benchmark for mortgages, closed at 4.82% on the day, up from 4.58% the prior week. This upward trajectory in government debt yields has directly influenced mortgage pricing, with mortgage-backed securities (MBS) trading at lower prices and higher yields. The yield increase also contributed to a 0.6% decline in the S&P 500 (SPX), while the iShares 20+ Year Treasury Bond ETF (TLT) dropped 1.8% as investors adjusted to higher long-term rates. For consumers, the latest rate hike has made refinancing less attractive. Refinance volume fell to a 12-month low, with the Mortgage Bankers Association reporting a 28% week-over-week drop. This decline reflects the increasing cost of restructuring existing mortgages, especially for borrowers with rates below 5%. Meanwhile, homebuyers face tighter affordability, with the monthly payment on a $400,000 loan rising by $240 per month compared to the prior month. Lenders are responding with differentiated offers, including tiered rate structures and fee waivers, to retain market share. However, experts caution that rate comparisons must now include not just headline percentages but also points, closing costs, and terms. The shift underscores the importance of proactive financial planning, particularly in light of potential Fed policy continuity into early 2026.