When the Federal Reserve raised interest rates in July 2023, the last increase before Wednesday’s decision, weekly average mortgage rates rose more than a percentage point to 7.79% in just a few months.
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So what’s going to happen to mortgage rates now that the Fed just hiked the benchmark interest rate 0.25% to a range of 3.75% to 4%?
Thursday, the weekly average rate for a 30-year fixed-rate mortgage in the U.S. jumped for a fourth straight week, to 6.95%, a stunning 0.19 percentage point increase from the previous week, according to the Federal Home Loan Mortgage Corporation, better known as Freddie Mac.
It’s the highest weekly average since January 2025, and the largest weekly increase in 16 months.
Mortgage rates have been above 7% all week at Mortgage News Daily for the first time since May 2025, with Thursday’s daily index dipping from a 19-month high of 7.24% to 7.19%. U.S. News and World Report posted a slight increase Thursday, to 7.257%, citing data provided by Zillow.
“Mortgage markets anticipated the move and began pushing rates higher well before the Fed’s announcement,” said Dejan Eskic, senior research fellow and lead housing expert at the University of Utah’s Kem C. Gardner Policy Institute.
Eskic said the Fed’s expected rate hike “reflects mounting inflationary pressures fueled by international conflict and economic uncertainty” as the war launched by the U.S. and Israel against Iran continues.
Just before the war began at the end of February, mortgage rates had slipped below 6%. The last time rates were that low was in 2022, as
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Now, with global energy prices climbing and the cost of gas heading towards $5 a gallon or more, Eskic said inflation concerns have intensified. Those concerns are pushing up the yield on long-term U.S. government bonds that’s tied to mortgage rates.
“Of course, we’re not in love with that move by the Fed, but understand they were worried about inflation,” Salt Lake Board of Realtors President Scott Colemere said. “It’s not great for our recovering real estate market but it’s also one chess piece on the board.”
Rate increases do sap consumer confidence, Colemere said. “Buyers are jittery.”
There’s currently plenty for sale in Utah with nearly 15,000 properties on the market statewide, he said, about three times past housing inventories. It’s getting close to a six-month supply, where buyers clearly have an advantage over sellers.
As mortgage rates go up, he said “sellers become generally more soft and offer more discounts,” Colemere said. A few individual home sellers are even buying down interest rates to help close a deal, he said, something many new home builders have been doing for a while.
There’s plenty of predictions that around a 7% mortgage rate may be the “new normal,” especially since an additional interest rate increase is anticipated from the Fed by the end of year with the chance of more in 2027.
“Mortgage Rates Are Likely to Stay High,” declared the headline a Redfin post Wednesday that warned, “until the underlying economic fundamentals—everything from oil prices to AI–that are keeping rates high change, mortgage rates are unlikely to fall significantly.”
Whether mortgage rates continue to go up is “anybody’s guess,” Colemere said.
“I hope we don’t see 8%,” he said when asked if that was a possibility. “I don’t have any reason to believe that we are (heading) one way or the other. It’s just too difficult to try to peg what’s going to happen in the next five or six months. Definitely there’s uncertainty in this market.”
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