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Fed Hike Lifts Rates as Mortgage Costs Climb to 7%

By Markets Desk · 2026-09-16 · 1 min read
A wooden gavel resting on a polished desk surface
Illustration: Tradingbird

The Federal Reserve raised benchmark rates by 25 basis points, ending a three-year pause. Mortgage rates have surged to 7%, while savings yields remain low.

The Federal Reserve increased its benchmark interest rate by 0.25 percentage points on Wednesday. This marks the first adjustment in over three years. The move signals a shift toward tighter monetary policy.

Mortgage rates have reached 7%, a significant increase from early March levels. Savers see minimal gains, with average checking account yields stuck at 0.07%. The disparity between borrowing costs and deposit returns is widening.

Mortgage Rates Climb to 7 Percent

Home loan rates hit three-year lows before reversing direction. Geopolitical tensions in the Middle East contributed to the upward trend. Rates now mirror the higher yields of the 10-year Treasury note.

The bond market priced in these hikes before the Fed acted. Mortgage Bankers Association analysts expect rates to stay above 6.5% through 2027. This environment makes borrowing more expensive for consumers.

Savings Yields Remain Minimal

National average interest on checking accounts remains at 0.07%. Savings account rates average 0.38%, offering negligible returns. High-yield options provide slightly better terms, mostly in the 3% range.

Money market accounts pay an average of 0.63%. High-yield variants offer rates just under 4%. CD rates for 12-month terms average 1.71%, though shopping can yield better deals.

Market Outlook Stays Optimistic

Goldman Sachs partner John Shugar predicts the S&P 500 will exceed 8,000 within a year. He notes that earnings growth has already absorbed much of the rate impact. Investors should expect volatility in the coming weeks.

The Fed indicated another rate hike is likely. This trajectory affects debt costs and deposit earnings. GN auto markets/housing: mortgage rates data confirms the rising trend in lending costs.

Based on reporting by Yahoo Finance, compiled by the Tradingbird desk.

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