Mortgage Rates Cross 7% Ahead of This Week’s Federal Reserve Meeting

Mortgage Rates Cross 7% Ahead of This Week’s Federal Reserve Meeting

Mortgage rates moved higher again last week as inflation concerns, rising energy costs and expectations for tighter Federal Reserve policy pushed bond yields higher.

Freddie Mac reported that its average 30-year fixed mortgage increased to 6.76% on September 10, up from 6.71% the previous week. The 15-year fixed average increased to 6.09%.

More current daily data showed an even larger move. Mortgage News Daily’s 30-year benchmark reached 7.07% Thursday, its first move above 7% in more than a year.

Why mortgage rates are rising

Inflation remains the central issue.

The Consumer Price Index increased 0.4% in August and 3.4% from a year earlier. Core CPI increased 0.3% monthly and 2.4% annually. Gasoline accounted for more than one-third of August’s monthly increase.

Producer prices also increased 0.4% during August and were 5.4% higher than a year earlier. Producer energy prices increased 4.2% during the month.

Those inflation readings arrived after the economy added 162,000 jobs during August, with unemployment remaining at 4.1%.

Together, the data have increased expectations that the Federal Reserve could tighten monetary policy.

What happens Wednesday?

The Federal Open Market Committee meets September 15–16.

Its policy announcement is scheduled for 2:00 p.m. Eastern Wednesday, followed by Fed Chair Kevin Warsh’s press conference at 2:30. The meeting also includes updated economic projections.

It’s important to understand that the Fed doesn’t directly set mortgage rates.

Mortgage rates respond to the bond market, which continually prices expectations for inflation, growth and monetary policy.

That’s why mortgage rates already moved substantially before this week’s meeting.

What should buyers do?

Don’t attempt to perfectly predict Wednesday.

Instead, compare financing options based on their complete economics.

A government-backed loan may advertise a lower interest rate than a conventional loan, but rate alone doesn’t determine which option is cheapest.

Compare monthly payment, mortgage insurance, upfront costs, cash to close, seller concessions and the amount of time you expect to keep the mortgage.

And remember: if rates improve materially later, refinancing may become an option.

A good financing strategy shouldn’t require your interest-rate prediction to be correct.

Don’t Guess. Know Your Numbers.

Mortgage rates are moving, but you don’t need to predict what happens next to make a smart decision.

If you’re thinking about buying, refinancing, or just want to know how today’s rates affect your options, let’s run the numbers.

Schedule a free 15-minute mortgage consultation. No pressure. No obligation. Just a clear plan.

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