Mortgage rates jump to nearly 7% after Fed rate hike highest in nearly two years

Mortgage rates climbed for the fourth week in a row, driving the average long-term US home loan rate to just below 7%, its highest level in over 19 months.The benchmark 30-year fixed rate mortgage rate rose to 6.95% from 6.76% last week, mortgage buyer Freddie Mac said Thursday.One year ago, the average rate was 6.26%.Higher mortgage rates can add hundreds of dollars a month to borrowers’ costs, limiting homebuyers’ purchasing power.

As rates rise, that can also lead prospective home shoppers to delay buying.The average rate hasn’t been this high since Jan.30, 2025.Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week.

That average rate increased to 6.26% from 6.09% last week.A year ago, it was at 5.41%.The housing market has been stuck in a rut this year in large part because of rising borrowing costs, as mortgage rates have kept marching higher in the months since the war between the US and Iran began in late February.

Expectations of higher inflation amid surging oil prices have pushed up the long-term bond yields that lenders use as a guide to pricing home loans, driving mortgage rates higher.Mortgage rates are influenced by inflation, Federal Reserve policy and bond-market investors’ expectations for the economy, among other factors.They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing home loans.

That yield, which was at 3.97% in late February, before the war began, breached 5% on Monday for the first time since 2023.It was at 4.94% at midday trading on the bond market Thursday.Meanwhile, the Federal Reserve’s decision Wednesday to increase its key interest rate for the first time in three years in a bid to tame surging inflation could also put upward pressure on mortgage rates.While the central bank doesn’t set mortgage rates, its decisions to raise or lower its short-term rate are watched closely by bond inves...