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(Bloomberg) -- US mortgage rates climbed closer to 7%, threatening to squeeze buyers trying to crack into the housing market.

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The average on a 30-year mortgage rose to 6.91% as of Jan. 2, up from 6.85% a week earlier, according to Freddie Mac data released Thursday. A measure from the Mortgage Bankers Association advanced 8 basis points to 6.97% in the period ended Dec. 27, a nearly six-month high.

High borrowing costs are weighing on affordability. They’ve also pressured demand recently, with the MBA’s index of home-purchase applications sliding nearly 7% to the lowest level since mid-November. While the figures are adjusted for seasonal effects, they are still prone to wide swings around the year-end holidays.

“It’s not exactly a good way to start the new year,” said Odeta Kushi, deputy chief economist at First American Financial Corp. “Industry experts are coming to the consensus that 2025 is another year of higher for longer for the housing market. It’s not great news.”

Mortgage rates tend to track Treasury yields, which continued to climb in late December after Federal Reserve policymakers projected a slower pace of interest-rate cuts in 2025 amid sticky inflation.

“Compared to this time last year, rates are elevated and the market’s affordability headwinds persist,” Sam Khater, Freddie Mac’s chief economist, said Thursday in a statement.

If mortgage rates stabilize, even at a high level, that could help kick-start a housing recovery, Kushi said. And if the Fed continues to cut its benchmark interest rate, that could help mortgage rates ease from current levels, she said.

Despite the end-of-year rise in mortgage rates, separate data from the National Association of Realtors showed prospective homebuyers are growing more accustomed to a higher rate environment.

In November, when rates averaged about 6.8%, a gauge of contract signings for purchases of previously owned homes advanced to the highest level since February 2023. Demand has been helped by an uptick in inventory.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.

(Updates with Freddie Mac data starting in the first paragraph.)