Mortgage rates in the US have risen by about one percentage point to nearly 7.5%, reaching their highest level in around three years. US mortgage rates have climbed sharply in just over a month. The sudden increase has made home loans more expensive for buyers.
Because they often offer higher returns than US government bonds, such bonds can attract investors. Mortgage rates could reach 8% if current pressures continue. An 8% mortgage rate is now becoming a realistic possibility rather than a distant risk.
Experts say it is difficult to predict exactly where mortgage rates will go next. However, continued pressure from inflation, economic growth, government borrowing and global uncertainty could push rates even higher. Technology companies are borrowing hundreds of billions of dollars to fund AI investments. These companies are issuing large amounts of debt to pay for their AI infrastructure projects. Some technology companies also have credit ratings close to or even stronger than that of the US government.
The US national debt crossed a record $40 trillion earlier in 2026. The debt has grown significantly since the COVID-19 pandemic, adding to concerns about the government’s ability to manage its borrowing, according to Yahoo Finance. Record US government debt is raising questions about the country’s finances. Higher Treasury yields also increase the government’s interest costs. When interest rates rise, the government must spend more money paying interest on its growing debt. Concerns about rising debt, continued borrowing and higher interest payments can make investors less willing to buy Treasury bonds , putting further upward pressure on yields and mortgage rates.
Kara Ng, a senior economist at Zillow, said the surge in AI spending could have a crowding-out effect on similar investment instruments, according to Yahoo Finance. Economists say the AI investment boom could be competing with other investment options. This means the growing demand for AI-related debt could make it harder for other bonds to attract investors without offering higher returns.
Financial markets often respond to expected Fed decisions in advance.
Mortgage rates can rise before the Fed actually increases its policy rate. This means the possibility of future interest rate hikes can already be reflected in mortgage rates before the central bank announces any change.
