Mortgage rates are expected to continue rising after a new indicator showed inflation rose 7.7 percent year-over-year in October, according to a report released Thursday by the U.S. Bureau of Labor Statistics.

The U.S. Federal Reserve has been raising interest rates in an all-out war against stubbornly high inflation, causing mortgage rates to soar.

The rate hike appears to be having an impact, as inflation fell slightly from 8.2% year-over-year in September.

But it's still high enough that the Fed could continue to pound the economy with more rate hikes, pushing the country to the brink of recession.

When the Fed raises interest rates, mortgage rates typically go up with them - much to the displeasure of homebuyers.

These higher mortgage rates have disqualified many first-time homebuyers from purchasing a home, while others have been forced to significantly reduce their budgets and expectations.

This decline may not be enough to ease concerns about the eventual direction of the economy and interest rates, and the Fed will continue on its path of continued rate hikes even as they begin to slow inflation.

As a result, mortgage rates should be expected to remain high as well.

According to Freddie Mac, mortgage rates have more than doubled since the beginning of the year, jumping from 3.22% in January to 7.08% in the week ending Nov. 10. These are the average weekly rates for a 30-year fixed-rate mortgage.

Today, homebuyers are paying about 81 percent more per month than they did a year ago.

This factors in the median home listing price in October compared to the same period last year, as well as the average mortgage rate for a 30-year fixed-rate loan for the second week of November this year and last.

The desire for homeownership is strong, but buying activity remains well below the levels seen last year when interest rates were lower. Many potential buyers are waiting for the volatility in mortgage rates to subside and for a clearer picture of the economic outlook.



Nonetheless, there were some bright spots in the inflation report that may bode well for buyers in the housing market.

Annual inflation fell to 7.7% in October from 8.2% in September. And from September to October, inflation rose by just 0.3%.

If inflation continues to slow, at some point, the Fed will stop raising rates and mortgage rates should fall.

It is expected that mortgage rates will continue to rise, but not to 8%. And early next year, she expects that inflation could fall enough to see an end to these rate hikes.