After a two-week break, U.S. mortgage rates began climbing again this week, a new report shows.

The higher 30-year fixed-rate mortgage is becoming yet another headwind for the shaky economy amid the Federal Reserve’s war on inflation.

The central bank has been hiking its benchmark interest rate in response to rising consumer costs. That, in turn, is making it more expensive for consumers to borrow money for major purchases like homes.

The monthly mortgage payment for a median-priced home has risen to around $2,000, according to Realtor.com. That’s $700 more than it was last year.

“Many homebuyers are finding that their budgets are no longer sufficient to purchase a home and are hitting ‘pause’ on their search,” says George Ratiu, Realtor.com senior economist.

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30-year fixed-rate mortgages

The average rate on a 30-year fixed mortgage rose to 5.51% this week, up from 5.30% a week ago, according to the latest report from mortgage finance giant Freddie Mac. Last year at this time, the rate was averaging 2.88%.

“Mortgage rates are volatile as economic growth slows due to fiscal and monetary drags,” says Sam Khater, Freddie Mac’s chief economist.

“With rates the highest in over a decade, home prices at escalated levels and inflation continuing to impact consumers, affordability remains the main obstacle to homeownership for many Americans.”

Over the past 12 months, prices on gas, groceries and other expenses spiked by 9.1%, the largest annual increase since 1981, the Labor Department reported this week.

“With inflation approaching a double-digit pace, there’s growing pressure on the Federal Reserve to take a more aggressive stance in its monetary tightening,” Ratiu says.

The Fed will announce its plan for rates later this month — and it’s not likely to be pretty.

“The mortgage market had already factored in several additional rounds of the Fed’s rate hike, but may have to adjust a bit higher based on today’s uncomfortable inflation rate,” said Lawrence Yun, chief economist for the National Association of Realtors.

15-year fixed-rate mortgages

The interest rate on a 15-year fixed-rate loan is averaging 4.67%, up from 4.45% last week, Freddie Mac says. This time last year, the 15-year rate was averaging 2.22%.

Mortgage rates fell to record lows nearly a year into the pandemic as the Federal Reserve lowered interest rates to boost the weakening economy. Economic activity rebounded stronger than expected, and home prices soared to new highs amid demand for housing.