Could mortgage rates climb back above 7%? Experts see higher costs ahead

Mortgage rates are already approaching 7%, and some borrowers may have crossed that threshold. The average rate for a 30-year fixed mortgage rose this week to 6.71%, its highest level in 13 months, according to Freddie Mac.

“

We're effectively there. And rates could easily go over.

Mark Zandi, chief economist at Moody's Analytics, told CBS News, “We're effectively there. And rates could easily go over.” Kate Wood, a lending expert at NerdWallet, said roughly half of the lender quotes she has seen are already above 7%.

The increase follows a sell-off in global bond markets. Economists cited concerns about inflation driven by rising energy prices, as well as growing U.S. government debt. Mortgage rates closely follow the 10-year Treasury yield, which rose from 4.08% to 4.77% over the past six months as investors demanded higher returns for holding long-duration bonds.

“

It's a very fragile time in the bond market, not just in the U.S. but globally.

Inflation remains above the Federal Reserve's 2% annual target, and traders now expect the central bank to raise its benchmark rate later this month for the first time since July 2023, according to CME FedWatch. The next major indicator will be the Labor Department's August Consumer Price Index report.

“

The housing market is going to remain under a glacier until rates come back in, which could be a while.

Zandi called the bond market “a very fragile time” and warned that rates could rise further. He said the housing market could remain “under a glacier” until borrowing costs fall. Jake Krimmel, a senior economist at Realtor.com, said he was unsure whether rates would reach 7%, but expected them to rise sooner than fall. Wood said higher rates could reduce competition among buyers and potentially help push home prices lower, even as borrowing becomes more expensive.

“

I don't know if we'll get to 7%, but we bet that things are going to go up sooner than they're going to go down.