Mortgage rates have confounded house hunters this year by steadily ticking higher. That trend is likely to continue, according to economists, with some predicting rates will climb back above 7%.

“We’re effectively there,” Mark Zandi, chief economist at Moody’s Analytics, told CBS News. “And rates could easily go over.”

The average rate for a 30-year fixed-rate mortgage rose this week to 6.71%, according to Freddie Mac, the highest in 13 months and up from below 6% in late February. Rates last reached the 7% mark in January 2025.

Why are mortgage rates rising?

Experts say the main reason mortgage rates are rising is because of turmoil in the bond market. Heightened inflation concerns due to rising energy prices and swelling U.S. government debt have sparked a global bond sell-off, pushing up borrowing costs for mortgages, auto loans and credit cards.

Mortgage rates closely track the 10-year Treasury yield, which has jumped from 4.08% to 4.77% over the last six months. That’s because investors are demanding higher returns to compensate for what they see as elevated risk associated with long-duration bonds. Those higher bond yields are putting upward pressure on mortgage rates.

With inflation still stuck well above the Federal Reserve’s 2% annual target, traders now think the central bank is likely to hike its benchmark rate later this month for the first time since July 2023, according to CME FedWatch, which tracks the probability of rate moves. 

A key piece of data will come next week, when the Labor Department releases its Consumer Price Index data for August. 

“It’s a very fragile time in the bond market — not just in the U.S. but globally,” Zandi said, adding that with bond investors on edge, rates could easily “rise further and push mortgage rates above 7%.”

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

Some borrowers may already be facing 7% mortgage rates, said Kate Wood, a lending expert at NerdWallet. Roughly half of the sample quotes from lenders she’s seen are already north of that threshold, she told CBS News.

Higher for longer?

“In terms of what borrowers are seeing right now, if they’re out there getting quotes from lenders, [they’ve] probably been seeing sevens for a little while now,” she said.

Jake Krimmel, senior economist at Realtor.com, thinks mortgage costs are likely to remain elevated for a while. 

“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,” he said.

Although higher mortgage rates can greatly increase the cost of buying a home, Wood said it could also present an opportunity.

“It’s not helping you money-wise with the interest rate, but it might actually be helping you money-wise on the home price because there is going to be substantially less competition,” she said, noting that lower rates would invite buyers to come off the sidelines.