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U.S. mortgage rates have hit a new high for the year (so far) as inflation fears continue to creep up.

The average rate on the 30-year fixed mortgage hovered between 7.4% and 7.5% this week, according to Mortgage News Daily’s daily data — its highest daily level since last November.

The Federal Reserve’s inflation-fighting campaign, launched two years ago, has lifted interest rates to between 5.25% and 5.5%. The Fed has kept rates steady during the last Federal Open Market Committee cycles as it weighs the highly-anticipated potential cuts — and as it closely watches inflation readings, which popped back up to 3.5% annually in March. While the mortgage rate is not controlled by the Fed, the central bank’s quantitative measures are a major factor driving the rate.

“The inflation numbers were bad, and both bond yields and mortgage rates are bouncing higher in response to what is now an uncertain timetable on when — or if — the Fed begins cutting rates in 2024,” Greg McBride, Bankrate’s chief financial analyst, said of the upward tick in mortgage rates this week.

Earlier this week, Fed Chair Jerome Powell continued to dial back expectations for an imminent rate cut at a Q&A session in Washington, D.C. He reaffirmed that the central bank needs to feel more confident in the economy before pulling the trigger on interest rate cuts. That means index readings that show inflation cooling down, not heating up.

And Federal Reserve Bank of Minneapolis president Neel Kashkari said earlier this month that the central bank may not cut interest rates at all in 2024 if inflation remains stubbornly high.

Bob Broeksmit, CEO of the Mortgage Bankers Association, said that the strong economy and job market will also keep mortgage rates elevated for the foreseeable future.

High mortgage rates have made an already-difficult homebuying environment even more challenging. Paired with climbing median home prices and low inventory, it’s one of the most challenging times in recent history to buy a home.

And Americans are continuing to feel uncertainty surrounding the overall state of the economy. The University of Michigan Index of Consumer Sentiment has stayed relatively unchanged in the first one-third of 2024, as people’s feelings towards the economy remain largely mixed.

“Expectations over personal finances, business conditions, and labor markets have all been stable over the last four months,” said Joanne Hsu, the survey’s director. “However, a slight uptick in inflation expectations in April reflects some frustration that the inflation slowdown may have stalled.”

The biggest change is the year-over-year perception of the economy, which has shot up more than 22% since last April, the survey shows.

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