US 30-Year Mortgage Rate Hits 6.95% After Fed Hike

The weekly average rate for a 30-year fixed mortgage in the United States rose to 6.95%. This marks a 0.19 percentage point increase from the previous week. It is the largest single-week jump in sixteen months. The figure represents the highest weekly average since January 2025.

The Federal Reserve raised its benchmark interest rate by 0.25 percent. The new range stands at 3.75 percent to 4.0 percent. This decision follows a similar hike in July 2023. That previous move pushed weekly average mortgage rates above 7.79 percent within months.

Inflation Pressures Drive Yield Increases

Market participants priced in the rate hike before the announcement. Daily indices from Mortgage News Daily showed rates above 7 percent all week. The daily index dipped to 7.19 percent on Thursday from a peak of 7.24 percent. Zillow data cited by US News and World Report showed a rate of 7.257 percent.

Dejan Eskic of the University of Utah attributed the trend to inflationary pressures. He cited international conflict and economic uncertainty as key factors. Global energy prices are climbing as gas costs approach five dollars per gallon. These factors increase the yield on long-term US government bonds. Mortgage rates are directly tied to these bond yields.

Real Estate Market Adjusts to Higher Costs

Scott Colemere, president of the Salt Lake Board of Realtors, noted a drop in buyer confidence. He described buyers as jittery in response to the news. The Utah market currently lists nearly 15,000 properties. This inventory level is about three times past norms. It approaches a six-month supply, favoring buyers.

Sellers are offering more discounts to close deals. Some are buying down interest rates to make properties more affordable. This tactic is common among new home builders. Colemere stated that further rate increases are anticipated by the end of the year. There is a chance of additional hikes in 2027.

Future Outlook Remains Uncertain

Redfin warned that mortgage rates are likely to stay high. The firm cited oil prices and AI-related economic factors as drivers. Colemere expressed hope that rates do not reach 8 percent. He stated there is no clear direction for the next five to six months. The market faces significant uncertainty regarding future trends.

Data from GN auto markets/housing: mortgage rates confirms the upward trajectory. The combination of Fed policy and global energy costs continues to pressure borrowing costs. Consumers face a challenging environment for securing home loans. The gap between seller expectations and buyer capacity remains wide.