The average U.S. rate on a 30-year fixed mortgage rose 15 basis points to 7.12% for the week ending September 18, reaching its highest level since May 2024, according to the Mortgage Bankers Association.

The increase came after the Federal Reserve raised its benchmark interest rate by a quarter percentage point to a range of 3.75% to 4%. Nearly all Fed policymakers also projected at least one additional rate increase before the end of the year.

Higher oil prices linked to geopolitical tensions have pushed Treasury yields higher, contributing to increased mortgage rates because home loan costs generally move with those yields. The five-year adjustable-rate mortgage, however, fell 13 basis points to 6.10%.

The higher borrowing costs are adding pressure to an already strained housing market, where elevated home prices have made affordability difficult for many buyers. Mortgage applications for both home purchases and refinancing declined during the latest week, while more borrowers turned to adjustable-rate mortgages to reduce their initial monthly payments.

Some daily mortgage surveys released Wednesday showed rates easing slightly, with certain 30-year fixed averages falling to about 7.04% or lower as oil prices moderated. The weekly MBA reading nevertheless showed rates remaining above the 7% threshold, underscoring the continued pressure facing prospective homebuyers.

Mortgage rates have climbed by more than a full percentage point since earlier in the year, leaving buyers facing a combination of high home prices and significantly more expensive financing.