Mortgage rates crossed above 7 percent for the first time in more than 20 months this week, adding fresh pressure on homebuyers already facing elevated home prices.

Freddie Mac reported Thursday that the average rate on the benchmark 30-year fixed-rate mortgage rose to 7.03 percent for the week ending September 24, up from 6.95 percent the prior week. The figure marks the highest level since January 2025 and stands well above the 6.30 percent average recorded one year earlier.

The 15-year fixed-rate mortgage also increased, climbing to 6.42 percent from 6.26 percent the week before. A year ago, that rate averaged 5.49 percent.

The latest jump reflects broader market pressures, including rising 10-year Treasury yields that reached 5.11 percent on Wednesday, their highest level since 2007. Analysts tied the move to persistent inflation above the Federal Reserve's 2 percent target and elevated energy prices, with Brent crude oil remaining above $100 per barrel amid geopolitical tensions.

The Federal Reserve raised its benchmark federal funds rate by a quarter point last week to a range of 3.75 to 4 percent, its first hike since 2023. Markets have priced in the possibility of additional increases before year-end.

Higher borrowing costs directly affect monthly payments. An increase of roughly one percentage point since earlier this year adds an estimated $276 per month in interest for a borrower financing a $400,000 home loan at the current average rate.

The housing market has shown resilience supported by a solid labor market and steady economic growth, according to Freddie Mac chief economist Sam Khater. However, the psychological threshold of 7 percent rates risks further slowing purchase activity during the fall season.

Mortgage applications have already declined in recent weeks as rates climbed. The five consecutive weekly increases underscore how quickly affordability conditions have deteriorated for prospective buyers.

Rates remain below the 7.79 percent peak reached in late 2023 but have erased much of the relief seen earlier in the year when averages briefly dipped near 6 percent.