US 30-Year Mortgage Rates Near 7%, Making Homes Harder to Afford

Mortgage rates in the U.S. have climbed to their highest level in six months, with the average 30-year fixed-rate mortgage hitting 6.91% this week. This is up from 6.85% last week and much higher than the 6.62% rate at the same time last year, according to Freddie Mac.

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“These higher rates are making it harder for people to afford homes, especially compared to a year ago,” said Sam Khater, Freddie Mac’s Chief Economist.

Rates Rise Despite Fed's Efforts

Even though the Federal Reserve has cut interest rates three times since September, mortgage rates have continued to climb. This is partly due to rising U.S. Treasury yields, which tend to drive mortgage rates.

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The jump in yields is linked to a strong economy and concerns that policies from President-elect Donald Trump—like tax cuts, tariffs, and stricter immigration rules—might lead to higher inflation. Investors are factoring these risks into long-term rates, pushing mortgage costs up.

Home Sales Got a Boost, But For How Long?

In November, sales of existing homes hit their highest level in eight months. This was mostly because people locked in deals during October or September when mortgage rates were lower.

December might also see solid home sales since contracts signed in November reached a 21-month high. However, rising mortgage rates could make some homeowners hesitant to sell, especially those with loans locked in at lower rates.

Fewer Listings, Higher Prices

Many homeowners currently have mortgages with rates under 5%. For these homeowners, selling their current home and buying a new one at today’s higher rates just doesn’t make financial sense. This creates what’s called the “rate-lock effect,” where fewer homes are put on the market.

With fewer listings and higher borrowing costs, home prices could go up even more, putting extra pressure on buyers already struggling with affordability.

If mortgage rates reach 7%, the housing market could face new challenges, slowing down both buyers and sellers. For now, affordability remains a significant concern, and many are watching closely to see how the market reacts.

Also Read: Rocket Homes Faces Allegations of Illegal Kickbacks in Mortgage Scheme