US mortgage rates have climbed above 7 percent, marking their first instance at this level since January 2025, according to federal lender Freddie Mac. This increase directly follows the US Federal Reserve's decision to raise interest rates, their first such action since 2023. The Federal Reserve stated high inflation as the reason for its interest rate hike. Mortgage rates are directly affected by these Federal Reserve adjustments.
The rise in mortgage rates is further aggravating an already challenging housing market. This market has faced persistent high interest rates and limited housing supply for several years. The situation adds to difficulties for Americans, who are currently contending with high prices for goods and services, alongside stagnant wages, making home ownership even less accessible.