Mortgage Rates Spiked on Fed Fears, May Ease Briefly

Full analysis

The Federal Reserve held its benchmark overnight lending rate steady at its July 29 meeting, but mortgage rates had already jumped sharply in the preceding week as traders speculated a hike was coming. The 30-year fixed mortgage rate rose more than 25 basis points — each basis point is one one-hundredth of a percentage point — hitting 6.75% to open the week, the highest reading since August 2025, before settling at a weekly average of 6.65% APR. Rates may dip modestly in the short term now that the hold is confirmed, but the relief is likely temporary: a rate increase is widely expected at the Fed's next meeting in September, and lenders may simply keep rates where they are until the outlook clarifies. The uncertainty stems partly from new Fed chair Kevin Warsh, who has been less communicative about the rate path than his predecessor Jerome Powell — a silence that caused some lenders to price mortgages as if a hike had already happened. Whether September brings a 25- or 50-basis-point increase will depend on incoming inflation data, particularly oil prices, which have been volatile amid renewed conflict in Iran.