Mortgage rates climb above 7% to highest level since May

Mortgage rates topped 7% this week, a key psychological threshold, in a sign of the US housing market’s unrelenting affordability challenges.

Mortgage rates topped 7% this week, a key psychological threshold, in a sign of the US housing market’s unrelenting affordability challenges. The average rate on a standard, 30-year fixed mortgage was 7.04% in the week ending January 16, according to a survey of lenders released Thursday by Freddie Mac. It’s the fifth consecutive weekly increase and the highest level since May. Mortgage rates this week were nearly a full percentage point higher than in late September, when the Federal Reserve began to cut interest rates. The yield on the 10-year US Treasury note, which influences mortgage rates, ratcheted higher over the past several weeks on signs of stubborn inflation, but tumbled Wednesday after the latest Consumer Price Index showed progress is back on track. The Fed has signaled only two rate cuts this year, which may not come until later in the year, according to Wall Street’s expectations. In addition to elevated borrowing costs, homebuyers are also contending with home prices that are hovering around all-time highs; and in some regions, surging home insurance premiums. Buyers could be stuck waiting a while for any meaningful relief: Economists do not expect the housing market to improve much this year as mortgage rates will likely remain above 6% through 2026. That dashes any hopes of homeownership for first-time buyers and low-income households living in metropolitan areas seeing rapid home-price growth such as New York and San Diego.