WASHINGTON, DC — Mortgage rates are still moving higher rather than lower, with Freddie Mac reporting that the average 30-year fixed rate reached 6.95% as of Sept. 17. That was up 19 basis points from the prior week and well above the 6.26% average seen a year earlier in September 2025.
The 15-year fixed rate also climbed, averaging 6.26% this week, 17 basis points higher than last week and 85 basis points above the level from the same time last year. With home loan costs hovering near 7%, the market is still reacting more to bond market swings than to hopes for near-term relief.
The Fed is still shaping the direction even if it does not set mortgage rates directly
The Federal Reserve does not directly set mortgage rates, but its actions still matter because short-term lending costs tend to follow the federal funds rate. After the Fed’s first interest-rate increase in three years, the Federal Open Market Committee signaled it is leaning toward another quarter-point increase before the end of the year.
That does not mean mortgage rates will move point for point with each Fed meeting. Even so, when the Fed pushes rates up, lenders and investors often price in tighter financial conditions, which keeps pressure on home loans. For buyers, that means the next move in mortgage costs may depend as much on inflation expectations as on housing demand.
The 10 year Treasury yield remains the main benchmark lenders are watching
Mortgage rates track the 10-year Treasury yield even more closely than they follow the Fed funds rate. On Sept. 16, the 10-year Treasury opened at 4.95%, up sharply from 4.11% a year earlier and above 5% repeatedly in the past week for the first time since 2023.
Lenders then add a spread on top of that Treasury yield to cover costs and risk. In the current market, that spread is close to two percentage points. Using Freddie Mac’s latest average, a 6.95% 30-year mortgage against a 4.95% Treasury yield leaves a spread of 2.0 percentage points.
Forecasts do not point to a return to the low rate era
Fannie Mae’s September forecast expects mortgage rates to stay near 6.7% through 2027, which suggests only modest relief even if the market cools. That outlook fits with the recent jump in bond yields and the broader uncertainty around inflation.
Century 21 Real Estate president and CEO Mike Miedler said in a statement that one Fed meeting will not change housing overnight. He said what matters for Americans is whether the broader household budget begins to feel more manageable, including the mortgage payment, paychecks and everyday costs such as groceries, gas and childcare.
In other words, lower mortgage rates alone would not solve affordability if other costs keep rising. Buyers are still being asked to weigh financing costs alongside everything else that goes into a monthly budget.
Home prices are still a major part of the affordability problem
Even if mortgage rates ease, buyers are still facing a housing market where demand outpaces supply in many price ranges. That imbalance has helped keep prices elevated, especially for first-time buyers searching for entry-level homes.
Data from the Federal Reserve Bank of St. Louis shows the median sale price of single-family homes rising over the long term since the first quarter of 2009. Back then, the median price was $208,400. By the second quarter of 2026, it had climbed to $410,700.
That means waiting for rates to fall may not produce the savings many buyers expect. In some cases, lower borrowing costs can bring more shoppers back into the market, which can support prices rather than pull them down.
Buyers are being pushed to think beyond a standard 30 year loan
For households trying to buy now, the practical advice is less about timing the market and more about fitting a home to the budget. That may mean choosing a condo, a smaller house or a property farther from the city center instead of waiting for a perfect rate that may not arrive soon.
Other options include considering a fixer-upper, which can lower the purchase price if the buyer is willing to take on repairs. An FHA 203(k) mortgage can combine the home purchase and renovation costs into one loan, with funds for repairs held in escrow and released as work is completed.
Buyers can also look at a 15-year mortgage, which usually carries a lower rate but a higher monthly payment, or an interest-rate buydown, which uses cash up front to lower the rate temporarily or permanently.
More on what homes, rents and new builds are doing near you, on RHS Commoner.
