Mortgage rates have climbed to their highest levels in 21 years, according to data released by Freddie Mac on Thursday.
The 30-year fixed-rate mortgage averaged 7.09% over the week ending on Thursday, marking a significant increase from 6.96% the week prior, the data showed.
The Federal Reserve has put forward an aggressive string of interest rate hikes as it tries to slash inflation by slowing the economy and choking off demand.
That means borrowers face higher costs for everything from car loans to credit card debt to mortgages.
When the Fed imposed its first rate hike of the current series in March 2022, the average 30-year fixed mortgage stood at just 4.45%, Mortgage News Daily data shows.
Each percentage point increase in a mortgage rate can add thousands or tens of thousands in additional cost each year, depending on the price of the house, according to Rocket Mortgage.
The average 30-year fixed mortgage has stood above 6.5% since May, Freddie Mac data shows. In November, the rate reached 7.08%, the previous high during the current rate hike cycle.
The rise in home-buying costs has slowed demand, but the primary cause of a stalled housing market is a lack of supply, Freddie Mac said in a statement on Thursday.
So far, the rate hikes appear to have slowed but not imperiled the nation's economic growth.
In June, a major upward revision of government data showed gross domestic product increased at a 2% annualized rate for a three-month period ending in March -- a sizable jump from the previous estimate of 1.3%.
The Fed staff no longer forecasts a recession for the U.S., Federal Reserve Chair Jerome Powell said at a press conference in Washington, D.C., last month.
Meanwhile, interest rate hikes have helped inflation well below its peak last summer of over 9%, but it remains more than a percentage point higher than the Fed's target rate.
After a monthslong cooldown, consumer prices accelerated slightly to 3.2% in July compared to a year ago, reversing some of the progress achieved in the inflation battle.
The last time the average 30-year fixed mortgage exceeded current rates, in March 2002, the rate stood at 7.18%, Freddie Mac data shows. Two years earlier, rates topped out at 8.64%.
The outlook for mortgage costs depends in part on whether the Fed chooses to continue raising interest rates. The central bank is set to make its next interest rate decision in mid-September.