Comparison to Fed funds rate, while interesting, is not all that important. Compared to the current rate of inflation (4%) current rates at 6.5-7% are still lower now than a few years ago when they were at 5.5% (and then-inflation at 2%).
Real interest rates are currently pretty low.
Adjustable rate mortgage do not offer enough of a break on interest rate to account for the risk of rising rates 1-5 years out.
