30-year fixed mortgage rates rose to nearly 7 percent. Why are rates increasing? Yahoo Finance Reporter Dani Romero joins the Live show to break down the reasons for the high rates and whether they will continue to increase.

Video Transcript

[? - ?] It is getting more expensive to buy a home. Mortgage rates rising towards 7%. This not good news for home buyers who are already navigating higher home prices and fewer options on the market. Our Dani Romero has been following this. Dani, this is-- I mean, when I saw this number, I'm like, how much higher can we get? 6.9%? This is crazy.

DANI ROMERO: Yeah. Sorry, home buyers. It's getting expensive out there. The average 30-year fixed mortgage rate hit 6.9% this week. That is the second highest level. Now, why are rates increasing? There are several factors weighing into this. For one, the unexpected debt downgrade from Fitch Ratings, that pushed Treasury yields up.

Remember, fixed mortgage rates tend to go hand in hand with the 10-year Treasury yield. Second, the US Treasury Department said that it plans to sell $100 billion in long-term securities. So investors have been weighing the effects on higher borrowing costs, on riskier assets. What does this mean for mortgage rates?

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Experts say that mortgage rates are likely going to go up, and especially we've heard from the Fed that they haven't reached their 2% inflation goal. So rates are likely going to increase, Diane.

AKIKO FUJITA: Danny, when you think about the impact of higher rates, it's not just about the buyers, it's the sellers who have remained on the sidelines because it's not worth it for them to sell right now. I mean, what is the tipping point to unlock supply, is it still 5%?

DANI ROMERO: Homeowners-- like you said, higher rates has made homeowners reluctant to sell and move. But a new survey from Zillow says that homeowners are twice as likely to sell if they have a mortgage rate 5% or higher. But most homeowners actually have a rate that's lower than that, about 80% of people do. But again, what does this mean over time?

Homeowners are likely going to accept a higher rate that could become the new normal, but the market will still be challenging for homebuyers, especially that home prices are still high and the fact that rates are also high. This could just [? definitely-- ?] and fewer options. We have to put that into this equation.

[? - ?] Not a lot of hope on the horizon at least when it comes to the home front.

DANI ROMERO: Yes.

[? - ?] All right. Thank you, Dani Romero.