Mortgage rates kept climbing this week as spreads on the 10-year Treasury yield widened, reaching a 16-year high on Thursday. 

Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 7.49% as of Oct. 5th, up 18 basis point from last week’s 7.31%. By contrast, the 30-year fixed-rate mortgage was at 6.66% a year ago at this time.

“Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” said Sam Khater, Freddie Mac’s chief economist. “Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation. Unsurprisingly, this is pulling back homebuyer demand.”

Other indices showed significantly higher mortgage rates this week.

HousingWire’s Mortgage Rates Center showed Optimal Blue’s 30-year fixed rate for conventional loans at 7.60% on Wednesday, compared to 7.43% the previous week. At Mortgage News Daily on Wednesday, the 30-year fixed rate for conventional loans was 7.70%, up from 7.65% the previous week.

On Thursday, the 10-year yield reached 4.72%, a 16-year high. At the beginning of the year, economists expected mortgage rates to fall to around 6% by the end of 2023. Now that such hope is lost, experts wonder whether rates will hit 8% this year. 

“The gap between the yield on the 10-year Treasury and the rate on a 30-year fixed rate mortgage has been around 3 percentage points, so as the Treasury yield approaches 5%, an 8% mortgage rate does not seem unlikely,” Bright MLS Chief Economist Lisa Sturtevant said in a statement.