Mortgage rates edge toward 7%, tightening the U.S. housing market

Data from Freddie Mac show the weekly average on a 30-year fixed mortgage reached 6.76%, its highest level in over a year, and analysts expect it to near 7% shortly. The increase translates into several hundred dollars of extra cost each month for borrowers, curbing their ability to afford homes and prompting many to delay buying. The rise is linked to higher long-term bond yields, which have been pushed up by inflation concerns, surging oil prices, and the Federal Reserve’s first interest-rate increase in three years.

The Fed’s decision, while not setting mortgage rates directly, influences bond markets and therefore mortgage pricing. Bright MLS chief economist Lisa Sturtevant says rates at or above 7% create a psychological barrier that will further strain affordability. Senior economist Jake Krimmel of Realtor.com notes that the recent rate moves may already reflect market expectations of additional Fed hikes, adding uncertainty to the housing outlook.