
Mortgage rates jumped after the Federal Reserve's decision to raise interest rates. The Fed increased the target range for the federal funds rate by 0.75 percentage points.
This move sent shockwaves through the mortgage market, causing rates to spike. The average 30-year fixed mortgage rate surged to 5.87%, a significant increase from the previous week's rate of 5.23%.
Homebuyers and refinancers are now facing higher borrowing costs, making it more expensive to purchase or renovate a home. As a result, some potential buyers may need to adjust their budgets or consider alternative options.
Expand your knowledge: Bank 5 Mortgage Rates
Fed's Impact on Mortgage Rates
The Fed's rate cut in September didn't quite have the expected effect on mortgage rates. Mortgage rate movements correlate strongly with changes in yields for U.S. Treasury notes, which determine the rate at which investors are willing to hold government bonds.
The 10-year Treasury is seen as the biggest influence on mortgage rates, and yields for the 10-year shot up in recent weeks, moving from about 3.6% just before the Fed's rate cut on September 18 to 4.01% Wednesday. This means that investors are less enticed by ultra-safe government bonds.
A different take: Are Mortgage Rates Based on the 10 Year Treasury
This change in yields might seem counterintuitive, as bond yields typically decrease as the Fed-determined federal funds rate does. But it's not necessarily flashing a bad signal for the economy broadly.
The U.S. has most likely avoided a recession this economic cycle, and this is being signaled by economists and traders alike. This shift in market sentiment is likely contributing to the increase in mortgage rates.
Related reading: Mortgage Rates Treasury Yields Spike
Current Mortgage Rates
Rates on 30-year new purchase mortgages jumped 12 basis points higher Tuesday, reaching 6.87%—just below last week's 6.93% peak.
The current 30-year mortgage rate is almost a full percentage point above the two-year low enjoyed in September, when the average plunged to 5.89%.
Here's a breakdown of the current mortgage rates:
Rates on 15-year mortgages climbed an even more dramatic 19 basis points Tuesday, reaching a new high of 6.10%—the priciest level in more than four months.
Jumbo 30-year mortgages also climbed to a new peak, with the current 30-year jumbo average of 6.99% being the most expensive since late July.
For your interest: Mortgage Rates below 6
Understanding Rate Fluctuations

Mortgage rates are influenced by a complex mix of macroeconomic and industry factors. These factors can interact with each other in unpredictable ways, making it difficult to pinpoint a single cause for rate fluctuations.
The Federal Reserve's monetary policy, particularly its bond-buying and funding of government-backed mortgages, has a significant impact on mortgage rates. In 2021, the Fed's bond-buying policy kept mortgage rates relatively low. However, starting in November 2021, the Fed began tapering its bond purchases, leading to increased mortgage rates.
The Fed's decision to raise the federal funds rate aggressively in 2022 and 2023 to combat inflation also contributed to the rise in mortgage rates. The fed funds rate and mortgage rates can move in opposite directions, but the speed and magnitude of the rate increases had a dramatic upward impact on mortgage rates.
A key indicator of mortgage rate movements is the yield on the 10-year Treasury note. This yield has shot up in recent weeks, moving from about 3.6% to 4.01%. This increase in yield has contributed to the rise in mortgage rates, despite the Fed's rate cut in September 2023.
A unique perspective: Home Buying Decision in a Lock Mortgage Rates
Powell Demurs on Rate Cuts

Jerome Powell, the chair of the Federal Reserve, recently stated that the U.S. economy is "not sending any signals that we need to be in a hurry to lower rates."
Powell's comments had a significant impact on financial markets, causing stocks to drop and Treasury yields to spike. The U.S. 10-year yield jumped to 4.450% on Thursday.
Traders quickly adjusted their expectations for a December rate reduction, with the CME Group's FedWatch tool showing a decrease from 72% to 58.7%. The percentage of traders expecting rates to remain at the current target range of 4.5% to 4.75% increased from 27.8% to 41.2%.
Powell's statement also led to an increase in mortgage rates, with the 30-year fixed mortgage rate rising to 6.97% at HousingWire's Mortgage Rates Center and 7.02% at Mortgage News Daily.
Mortgage lenders are now facing a challenging environment, with the upward move in mortgage rates putting the "mini-refi rally" experienced in September on hold.
Take a look at this: 7 Mortgage Rates
What Causes Rate Fluctuations?
Mortgage rates are determined by a complex interaction of macroeconomic and industry factors. This makes it difficult to pinpoint the exact cause of rate fluctuations.
The level and direction of the bond market, particularly 10-year Treasury yields, play a significant role in determining mortgage rates. The Federal Reserve's monetary policy, especially its bond-buying and funding government-backed mortgages, also has a major impact.
Competition between mortgage lenders and across loan types can cause mortgage rates to fluctuate. This is because different lenders and loan types can have varying interest rates and fees.
A key factor that kept mortgage rates relatively low for much of 2021 was the Federal Reserve's bond-buying policy. The Fed was buying billions of dollars of bonds in response to the pandemic's economic pressures.
The Fed's decision to taper its bond purchases downward in November 2021 led to a significant increase in mortgage rates. By March 2022, the Fed had reached net zero bond purchases.
For more insights, see: Private Bank Mortgage Rates

The Fed's aggressive rate hikes in 2022 and 2023, which raised the federal funds rate by 5.25 percentage points over 16 months, had a dramatic upward impact on mortgage rates. The fed funds rate and mortgage rates can move in opposite directions.
Here's a summary of the key factors that influence mortgage rates:
- The level and direction of the bond market, especially 10-year Treasury yields
- The Federal Reserve's current monetary policy, especially as it relates to bond buying and funding government-backed mortgages
- Competition between mortgage lenders and across loan types
The Fed maintained the federal funds rate at its peak level for almost 14 months, beginning in July 2023. However, on Sept. 18, the central bank announced the first rate cut in what's expected to be a series of decreases in 2024 and likely 2025.
Why Are Rates Rising?
Mortgage rates are on the rise, and it's not just because of the Fed's rate cut. In fact, the rate cut itself had little to do with the sudden spike in mortgage rates.
The average lender is now at least 0.20% higher than earlier in the day, with top-tier conventional 30-year fixed rates easily surpassing 7%. This is a significant increase, and it's not just a temporary blip.
The Fed's rate cut was predictable, and that predictability led to trading in the financial markets. This trading caused longer-term rates, like mortgage rates, to adjust in advance of the rate cut. Mortgage rates care more about the Fed's overall rate cut/hike outlook than they do about individual cuts or hikes.
The Fed's dot plot, which shows the median Fed member's view on the appropriate Fed Funds Rate at various points in the future, revealed a more conservative approach to cutting rates. This, combined with a shift in the dot plot showing higher rates by the end of next year, sent bond yields skyrocketing.
The bond market didn't like the new outlook, and yields jumped at 2pm ET when the dot plot was released. By 4pm, 10-year Treasury yields had risen more than 0.10%, and 5-year Treasuries were up more than 0.13%. These big moves in the bond market led to lenders repricing to higher rates.
Here's a rough breakdown of the factors influencing mortgage rates:
- Fed's rate cut/hike outlook
- Dot plot and Fed members' views on interest rates
- Changes in bond yields, particularly the 10-year Treasury
- Lender repricing in response to bond market movements
Tracking Mortgage Rates

Mortgage rates can be unpredictable, but there are ways to track them and stay informed. You can use the Zillow Mortgage API to get national and state averages, assuming a loan-to-value ratio of 80% and an applicant credit score in the 680-739 range.
The average lender is at least 0.20% higher than earlier this morning, and the top tier conventional 30yr fixed rate will easily be back over 7% for the average lender. This is due to the Fed's rate cut outlook, which showed the median Fed member sees much higher rates by the end of next year compared to the last dot plot 3 months ago.
To track mortgage rates effectively, you can use the following resources:
- Track live mortgage rates
- Instant rate change notifications
- Mortgage calculators
- See rates from local lenders
- Daily market analysis, news
- Streaming MBS and Treasuries
Note: The above resources are provided as is, and the resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates.
Weekly Freddie Mac Average

The Weekly Freddie Mac Average is a widely followed indicator of 30-year mortgage rates. It's published every Thursday and provides a snapshot of the current market.
Freddie Mac's average is calculated by blending five previous days of rates, which can result in a slightly different reading than what you might see in our daily reports. Last week's reading shot up another 7 basis points, to 6.79%, which is a significant increase.
The current Freddie Mac average is 6.79%, a sharp contrast to the 6.08% reading just six weeks ago, which was the lowest average in two years. To put this in perspective, last October's average surged to a historic 23-year peak of 7.79%.
Here's a comparison of the current Freddie Mac average with some other notable readings:
Keep in mind that the rates you see advertised online may not be directly comparable to these averages, as they often involve cherry-picked rates that may not reflect your individual circumstances. The rate you ultimately secure will depend on factors like your credit score, income, and loan details.
How We Track

We track mortgage rates using a variety of sources. The national and state averages are provided by the Zillow Mortgage API, which assumes a loan-to-value (LTV) ratio of 80% and an applicant credit score in the 680–739 range.
These rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. The Zillow Mortgage API provides these rates as is, subject to the Zillow Terms of Use.
We also rely on data from Freddie Mac, the Congressional Research Service, and the Federal Reserve to stay up-to-date on mortgage rates. The Federal Reserve's Federal Open Market Committee Meeting Calendars, Statements, and Minutes are particularly useful for understanding the impact of monetary policy on mortgage rates.
The following sources are used to track mortgage rates:
- Freddie Mac. “Mortgage Rates.”
- Congressional Research Service. "Federal Reserve: Tapering of Asset Purchases", Page 1.
- Federal Reserve. "Federal Open Market Committee: Meeting Calendars, Statements, and Minutes (2019-2026)."
Top News
Mortgage rates have climbed to the highest level since August, which is not the relief that prospective home buyers were hoping for after the Federal Reserve's interest rate cut.
The interest rate cut was the first in over four years, but it didn't quite have the impact that many were expecting.
Frequently Asked Questions
Will mortgage rates ever go down to 3% again?
Mortgage rates returning to 3% are unlikely in the near future, but it's possible they may drop to that level again in decades to come. However, the timing and likelihood of this happening are uncertain and depend on various economic factors.
Is 7% high for a mortgage?
Mortgage rates above 7% are considered high, especially for borrowers with lower credit scores or non-qualifying mortgage (non-QM) situations. However, mortgage rates can fluctuate significantly, so it's essential to stay informed about current market conditions.
Sources
- https://www.cnbc.com/2024/12/20/why-mortgage-rates-jumped-despite-fed-interest-rate-cut.html
- https://www.mortgagenewsdaily.com/markets/mortgage-rates-12182024
- https://www.investopedia.com/mortgage-rates-jump-back-up-after-2-day-drop-nov-13-2024-8744464
- https://www.housingwire.com/articles/mortgage-rates-jump-to-7-after-powell-speech/
- https://www.forbes.com/sites/dereksaul/2024/10/16/mortgage-rates-rise-to-2-month-high-defying-conventional-interest-rate-cut-wisdom/
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