Mortgage rates top 7% for the first time since January 2025

The average 30-year fixed mortgage rate jumped to 7.03% on Thursday, Freddie Mac reported, up from 6.3% a year earlier. It’s the first time rates have topped 7% in 20 months, crossing a closely watched psychological threshold.

Buyers face tighter choices
Higher borrowing costs are keeping some buyers on the sidelines after years of weak home sales. They are also making adjustable-rate and interest-only mortgages more appealing because they can offer lower initial payments, although both carry additional risks.

Sellers may also hesitate to move, especially those holding older mortgages with rates near 3%. Meanwhile, home builders face higher financing costs and may have to spend more on incentives to attract buyers.

The result: higher rates could keep the housing recovery under pressure.