US mortgage rates near 7% as homebuyers face longer wait

Mortgage rates in the United States have reached nearly 7%, causing homebuyers to face extended wait times. The weekly average rate on a 30-year fixed-rate home loan climbed to just below 7 percent, marking its highest level in over 19 months. This increase is the fourth consecutive week that mortgage rates have risen. The average rate has not been this high since January 30, 2025.

Borrowing costs on 15-year fixed-rate mortgages, often chosen by refinancing borrowers, also saw an increase. That rate rose to 6.26 percent from 6.09 percent last week, compared to 5.41 percent a year ago. Higher mortgage rates can add hundreds of dollars to borrowers' monthly costs, reducing homebuyers' purchasing power.

The housing market has been stagnant this year due to rising borrowing costs, as mortgage rates have continued to climb since the beginning of the conflict between the US and Iran in late February. Expectations of higher inflation due to surging oil prices have pushed up long-term bond yields, which lenders use to price home loans, resulting in higher mortgage rates. Mortgage rates are influenced by inflation, Federal Reserve policy, and bond-market investors' expectations for the economy.

The Federal Reserve's decision on Wednesday to raise its key interest rate for the first time in three years to combat surging inflation may also contribute to the upward pressure on mortgage rates. While the central bank does not directly set mortgage rates, its rate decisions influence bond investors and can affect the yield on 10-year Treasurys. The Fed also hinted at another rate hike later this year.

Lisa Sturtevant, chief economist at Bright MLS, warned that the rate hike will "all but guarantee that mortgage rates will remain stuck at or above the 7% threshold, creating a psychological and financial barrier that will sharply squeeze affordability and sideline even more prospective buyers." The US housing market has been in decline since 2022, with sales of previously occupied homes remaining flat last year and slowing again last month.