The average 30-year fixed mortgage rate climbed to 7.17%, marking its highest level in nearly two years. This increase adds fresh pressure on a housing market already struggling with weak demand.
The move follows a rise in the 10-year Treasury yield, which crossed the 5% mark on Monday. Mortgage rates typically track long-term government bond yields closely.
This spike in borrowing costs makes homeownership less affordable for many prospective buyers. Higher rates also discourage existing homeowners from selling and giving up their lower locked-in rates.
The housing market has cooled significantly since rates began their upward climb. Sales of existing homes have fallen, and price growth has slowed in many regions.
Builders face a difficult environment as financing costs rise for construction loans. Some are offering rate buy-downs and other incentives to attract hesitant buyers.
Analysts note that the 7.17% figure represents a psychological hurdle for consumers. It nears the peak seen in late 2023, when rates briefly surpassed 7.5%.
The Federal Reserve’s stance on interest rates remains a key factor. Any signal of prolonged high rates could keep mortgage costs elevated through the year.
