Mortgage Rates Hit 18-Month High of 6.95% After Fed Hike

Average mortgage rates for a 30-year fixed home loan climbed to 6.95% for the week ending September 17, marking the highest level in nearly 18 months. This represents a 19 basis point increase from the previous week's average of 6.76% and is the highest rate recorded since late June 2025. For comparative context, the average rate stood at 6.26% one year ago. This week's surge also signifies the largest one-week increase in mortgage rates since April 2025, a period characterized by economic volatility due to President Donald Trump's tariff policies.

Freddie Mac's chief economist, Sam Khater, stated that the 30-year fixed-rate mortgage continues to experience fluctuations as markets analyze economic data. The primary driver behind this significant rate increase is the upward trend in 10-year Treasury yields. These yields reached their highest point in 19 years, surpassing 5% on Tuesday, in anticipation of the Federal Open Market Committee's (FOMC) decision. On Wednesday, FOMC members voted 12-0 to implement an increase in the benchmark interest rate. This quarter-percentage-point hike, the first such increase in three years, elevates the federal funds rate to a range of 3.75% to 4%. The Federal Reserve's objective with this action is to curb inflation, which has been exacerbated by elevated oil prices stemming from the ongoing conflict in Iran.

Since the commencement of the conflict in February, mortgage rates have seen an increase of over 90 basis points. When examining year-over-year data, current rates are more than 60 basis points higher than those observed in 2025. It is important to clarify that the Federal Reserve's rate hike does not directly influence the Freddie Mac data reported for the past week, as this figure represents an average of mortgage rates observed over that seven-day period. Realtor.com® senior economist Jake Krimmel noted that a clearer understanding of how the Fed's actions will impact mortgage rates will likely emerge in the subsequent week and beyond.

For individuals looking to purchase or sell homes, the current environment of the highest mortgage rates in over a year is coinciding with an already sluggish housing market. August saw existing home sales reach their lowest point for 2026, and pending sales have registered negative year-over-year growth. Furthermore, purchase applications have also declined, indicating a cooling demand in the real estate sector. This confluence of factors presents significant challenges for both buyers, who face higher borrowing costs, and sellers, who may experience longer listing times and potentially lower offers.