US Mortgage Rates Hit 7.2% as Fed Raises Benchmark Rates and Geopolitical Tensions Rise

The average rate for a 30-year fixed mortgage in the US has reached its highest level in about a year and a half, hitting 7.2% this week.

This marks a significant increase from a year-to-date low of 5.98% in February, rising to 6.71% in September and now exceeding 7% for the first time since January 2025.

The Federal Reserve's recent decision to raise benchmark rates to combat inflation has contributed to this surge, as well as the resumption of US-Iran conflict which has driven up oil prices and intensified inflationary pressures.

This rise in mortgage rates is expected to further squeeze homebuying affordability, pushing more potential buyers out of the market. According to Jessica Lautz, Deputy Chief Economist at the National Association of Realtors, many homeowners with low-rate existing mortgages are 'locked in place' and unwilling to move, compressing the available inventory.