US mortgage rates have exceeded 7% for the first time since January 2025, according to federal lender Freddie Mac. This rise follows the US Federal Reserve's decision to increase interest rates, the first such hike since 2023, which directly affects mortgage rates.
The Federal Reserve raised rates by a quarter-point on 16 September, setting them in a range of 3.75% to 4%. A majority of the Fed’s rate-setting committee anticipates at least one more rate hike before the end of this year.
The 10-year US Treasury yield, which influences the 30-year mortgage rate, also reached its highest level since July 2007 on Thursday. Similarly, the 30-year Treasury yield hit its peak since 2004, as investors expect another Fed rate hike next month.
This increase in rates comes as the US housing market has experienced a slowdown, with existing home sales reaching their 2026 low in August. Anthony Smith, a senior economist at Realtor.com, noted that a 7% handle is both a psychological and mathematical threshold, arriving at a time when leverage typically shifts towards buyers.