Prior to the Federal Reserve's decision to raise rates, rising Treasury yields reached a level not seen since 2007, which caused mortgage rates to reach their highest point in almost 18 months.
The average rate on 30-year fixed home loans increased to 6.95% for the week ending September 17, up 19 basis points from 6.76% the week before and the most since late June 2025. For comparison, a year ago, rates averaged 6.26%.
Since April 2025, when President Donald Trump's tariff actions rocked the economy, this represents the largest one-week rate hike. The 30-year fixed-rate mortgage continues to fluctuate as markets assess economic data.
Rising 10-year Treasury rates, which reached their highest levels in 19 years and above 5% on Tuesday in anticipation of the Federal Open Market Committee's (FOMC) 12-0 vote on Wednesday to raise the benchmark interest rate, are the main cause of the spike.
The Federal Reserve recently raised interest rates by 0.25%, which is its first increase in three years. This brings the federal funds rate to between 3.75% and 4%. The goal is to slow down inflation, which has been affected by high oil prices connected to the ongoing war in Iran.
Since the conflict started in February, mortgage rates have gone up by more than 90 basis points. They are also over 60 basis points higher than they were in 2025. However, the recent Fed increase is not included in today’s Freddie Mac mortgage rate because Freddie Mac’s rate is based on an average from the previous week. The full effect of the Fed’s decision will probably show up in mortgage rates over the next few weeks.
Higher mortgage rates are making things harder for people who are trying to buy or sell homes. The housing market is already slowing down. Existing-home sales reached their lowest point of 2026 in August, pending home sales are lower than they were last year, and applications to buy homes are down 19% compared with a year ago.
For buyers, higher mortgage rates mean higher monthly payments and make buying a home more difficult. Sellers may have to lower their prices or decide to take their homes off the market. With mortgage rates getting close to 7%, the housing market could slow down earlier than usual this fall.
Your credit score is also very important when applying for a mortgage. It can affect whether you qualify for a loan and what interest rate you get. Generally, the higher your credit score, the better your chances of getting a lower interest rate.
The credit score you need depends on the type of mortgage you choose. A score of 620 is usually considered fair, while some FHA loans may be available to people with scores as low as 500.
If your credit score is 740 or higher, you are generally considered to have very good credit. This can help you qualify for better mortgage rates and potentially lower monthly payments.
Every mortgage program has its own credit requirements, and some lenders may have stricter rules. Basically, lenders want to see that you have a good enough credit history and enough income to pay back the loan.
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