WASHINGTON D.C.: The average long-term US mortgage rate climbed this week to its highest level in more than 20 years.

Mortgage buyer Freddie Mac said that last week, the average rate on the benchmark 30-year home loan rose to 7.09 percent from 6.96 percent, compared to 5.13 percent one year ago.

This rise is the fourth consecutive weekly increase for the average rate and the highest since early April 2002, when it averaged 7.13 percent.

Such high rates can add hundreds of dollars a month in costs for borrowers.

“With prices even higher than they were a year ago in many markets, crossing the 7 percent mortgage rate threshold again could be what sets in motion a major contraction in the housing market this fall,” noted Lisa Sturtevant, chief economist for Bright MLS, as quoted by the Associated Press.

The latest rate rise follows a sharp increase in the 10-year Treasury yield, which rose more than 4 percent this month and is continuing its upward trend.

“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales,” said Sam Khater, Freddie Mac’s chief economist, according to the Associated Press.

High inflation forced the Federal Reserve to raise its benchmark interest rate 11 times since March 2022.

Mortgage rates do not necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note.

The average rate on a 30-year mortgage remains more than double what it was two years ago, when it was just 2.86 percent.

Due to the significantly higher rates, homeowners who locked in those lower borrowing costs two years ago are now reluctant to sell and pay a higher rate on a new property.