Mortgage rates are back above 7%. How much higher could they climb?
Rates are "far more likely to go up than down by the end of the year," a senior economist at Realtor.com told CBS News.
Mortgage rates have reached a 7% threshold this week, signaling the highest level in nearly two years. Economists predict that borrowing costs may continue to climb rather than decrease in the coming weeks. The average 30-year fixed-rate mortgage currently sits at 7.03%, the highest since January 2025, according to Freddie Mac data.
Mortgage Bankers Association figures show the 30-year fixed-rate mortgage hit 7.12% the week of September 18. Factors contributing to the rise in mortgage rates include higher inflation, tighter monetary policy, stronger economic growth, and increasing federal debt. The 10-year Treasury yield has spiked in recent months as investors seek higher yields to compensate for riskier investments amid the Iran war and rising government debt.
Experts are divided on whether rates will continue to rise, with some projecting even higher levels over the next few months. However, Zillow predicts rates could dip to 6.7% by year-end and 6.3% by the end of 2027, offering some relief to buyers. The extent of the rate decline depends on the resolution of the Iran war and subsequent impact on oil prices.
If a peace deal is reached, mortgage rates could plummet. Conversely, if the war persists, rates may remain high. Inflation in August stood at 3.4%, up one percentage point since the war began, prompting the Federal Reserve to raise interest rates at its latest meeting. Another rate hike could occur before the end of the year, with a 66% likelihood according to investors.
Despite the current rise in borrowing costs, home buyers may still have some advantages, such as reduced competition and potential price cuts in the market.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
