Mortgage rates just closed the refinance door on fall renovation plans, but they left the home-equity window open. Freddie Mac put the 30-year fixed at 6.71% for the week ending September 3, the highest since July 2025 and up from 6.50% a year ago. Friday’s hot August jobs report then pushed Treasury yields higher and the odds of a Federal Reserve rate hike on September 16 to about 60%. Yet the average home-equity line of credit fell to 7.16%, a 2026 low, and in Canada the Bank of Canada held at 2.25% for a seventh straight decision, keeping HELOCs there near 4.95%. Two weeks ago we said a renovation financing window was opening. It is now narrower, and it has a date on it.
Key takeaways
- The 30-year fixed hit 6.71% (week ending September 3), its highest since July 31, 2025; the 15-year rose to 6.04%
- Friday’s 162,000-job August report lifted the 10-year Treasury to 4.81% and the odds of a Fed hike on September 16 to roughly 60%
- HELOC rates moved the other way: 7.16% average (Curinos, September 4), a 2026 low; Bankrate’s survey shows 7.29%
- Canada: policy rate held at 2.25%, prime 4.45%, HELOCs from 4.95%, best 5-year fixed 3.94%; next decision October 28
- Refinancing to fund a project no longer pencils for most owners; a HELOC quote locked before September 16 still does
Why Mortgage Rates Rose This Week
Two things happened. First, Freddie Mac’s weekly survey rose five basis points to 6.71%, one notch below the 6.72% of July 31, 2025. The 15-year fixed, the loan refinancers lean on, climbed to 6.04% from 5.98%, and it was 5.60% a year ago. Second, the August jobs report landed Friday at 162,000 new jobs, roughly three times the forecast. The 10-year Treasury yield, the benchmark mortgage lenders price against, rose to 4.81%, and the two-year yield reached its highest level since January 2025.
That report is the same one that showed construction pay rising 5.2% a year. A hot labor market with July inflation at 3.4% gives the Fed cover to raise rates. CME FedWatch priced a September hike near 50-50 early in the week and about 60% by Friday’s close. The August CPI report on September 11 is the last big input before the meeting.
The Refi Math No Longer Works
In our August 24 piece the sample refinance moved a $350,000 balance from a 2023-peak 7.25% to about 6.7%, freeing roughly $124 a month. At 6.71% that saving is still about $127 a month before closing costs, which typically run 2–5% of the loan. The problem is direction. Anyone who held out for 6.5% has watched the rate climb for two weeks, and a Fed hike would push it further. The rule of thumb, refinance when you can cut at least half a point and stay put for a few years, now applies only to owners who locked above 7.25%.
Why HELOC Rates Fell Anyway
Home-equity lines are priced off the prime rate, which follows the Fed funds rate, not the Treasury market. Prime has sat at 6.75% since the Fed’s December 2025 cut, so HELOC pricing has drifted on lender competition rather than bond yields. Curinos data put the average adjustable HELOC at 7.16% on September 4, a 2026 low, for borrowers with a 780 credit score and less than 70% combined loan-to-value. Bankrate’s broader survey shows 7.29%, and a fixed-rate home equity loan averages 7.35%.
The catch is the same Fed meeting. A quarter-point hike moves prime, and every variable HELOC, by a quarter point within days. On a $50,000 draw that is about $10 a month, or $125 a year. Small, but it would be the first move up for HELOC borrowers since the Fed began cutting in 2024, and lenders tend to reprice new offers ahead of the decision.
| Borrowing option (this week) | United States | Canada |
|---|---|---|
| 30-year / 5-year fixed mortgage | 6.71% (30-yr) | 3.94% (5-yr, best available) |
| 15-year fixed / 5-year variable | 6.04% (15-yr) | 3.30% (5-yr variable, best) |
| Prime rate | 6.75% | 4.45% |
| Average or best HELOC | 7.16% avg (Curinos); 7.29% (Bankrate) | from 4.95% (TD, RBC, Scotiabank) |
| Fixed home equity loan | 7.35% avg | n/a |
| Central bank next decision | September 16 (hike odds ~60%) | October 28 (held at 2.25%) |
Canada: A Hold With a Warning
The Bank of Canada kept its policy rate at 2.25% on September 2, the seventh consecutive hold, and said upside risks to inflation have increased. July CPI ran at 3.0%, a full point above target, and Governor Macklem told reporters the global energy shock is the bigger driver than Canada’s counter-tariffs. Prime stays at 4.45%, so variable mortgages and HELOCs did not move. Ratehub lists HELOC offers from TD, RBC and Scotiabank at 4.95%, the best 5-year fixed at 3.94% and the best 5-year variable at 3.30%.
For a homeowner in Toronto finishing a basement, that is cheaper money than any US owner can get, and it is stable until at least October 28. The risk is the direction of the next move. With inflation at 3.0% and tariffs feeding through, the Bank’s language points toward a hike before a cut, so a variable HELOC is a bet that the October forecast comes in soft.
What to Do Before September 16
- Skip the refi unless you are above 7.25%. At 6.71% the saving is real for 2023 borrowers and thin for everyone else. Keep the loan you have.
- Get the HELOC quote this week. Rates are at a 2026 low and lenders reprice ahead of Fed decisions. The application, not the draw, is what locks the offer.
- Consider a fixed home equity loan for a fixed-scope job. At 7.35% it costs slightly more than a HELOC today, but a hike closes the gap in one move.
- Size the project to the payment, not the rate. A kitchen in Denver financed with a $50,000 HELOC at 7.16% runs about $298 a month interest-only. Ask for a phased quote so the first draw covers what matters most.
- Get the price in writing. Labor is up about 5% a year and materials face the September 8 tariff round, so a dated, fixed-price scope protects you on both sides of the ledger.
For Pros: Expect Re-Scoped Jobs
Clients who were waiting on a refinance to fund a full remodel will call back with a smaller, equity-funded budget. The contractor who answers with a phased scope, kitchen now, bathroom in spring, keeps the job instead of losing it to “let’s wait.” On Masters’ Guild, homeowners post the job with that budget attached, so the quote you send already fits the money they have. Find kitchen remodeling projects near you and quote to the number.
The Bottom Line
Mortgage rates at 6.71% end the refinance-to-renovate plan for most homeowners, but the home-equity route is at its cheapest point of the year, in both countries, for roughly eleven more days. If a fall project is on your list, the financing decision belongs in this week, and the contractor quote right behind it.
