The average rate on 30-year fixed home loans climbed to 6.66% for the week ending July 30 after the Fed voted to hold rates steady.
Mortgage rates have surged to their highest level in a year, after a divided Federal Reserve opted to hold its key interest rate steady while signaling potential future hikes as the conflict in Iran continues to fuel inflation.
The average rate on 30-year fixed home loans hit 6.66% for the week ending July 30, up 8 basis points from 6.58% the previous week and the highest in one year, according to Freddie Mac. For perspective, rates averaged 6.72% during the same period in 2025.
"The 30-year fixed-rate mortgage averaged 6.66% this week," says Sam Khater, Freddie Mac's chief economist. "The housing market continues to benefit from more available inventory, providing prospective homebuyers with additional options and helping support buyer activity as mortgage rates fluctuate."
The upswing in mortgage rates follows Wednesday’s 9-3 vote by members of the Federal Open Market Committee (FOMC) to keep the federal funds rate unchanged in a range of 3.5% to 3.75%, where it has stood since December.
However, three FOMC policymakers dissented in favor of a 0.25 percentage-point hike, signaling that the 12-member panel is no longer in lockstep on inflation, and that a rate hike could be coming as soon as September.
Deutsche Bank said in a statement following the Fed decision that its economists now expect FOMC to hike rates by a total of 50 basis points by the end of the year.
The 10-year Treasury yield jumped as the Fed decision came out Wednesday afternoon, and markets have started pricing in a rate increase as soon as September.
“Since mortgage rates tend to track the 10-year Treasury, that repricing points to upward pressure in the days ahead," says Realtor.com® senior economist Anthony Smith.
Financial markets now put the probability of the Fed raising rates to a 3.75%-to-4% range at its September meeting at over 63%, according to CME FedWatch.
The Fed’s decision to continue hitting the pause button while keeping a close eye on inflation was made against the backdrop of the unfolding conflict in the Middle East, which again escalated this week as the U.S. military launched airstrikes against Iran in retaliation for an attempted attack on American military positions in Jordan.
(Realtor.com) Oil prices surged in response to the escalating hostilities and President Donald Trump’s aggressive rhetoric aimed at Tehran, topping $90 a barrel on Wednesday.
"Because oil remains the primary channel through which the Iran conflict feeds inflation, a de-escalation and a reopening of the Strait of Hormuz remains the clearest path back toward lower rates," notes Smith.
However, a peace deal remains elusive as the two sides continue to exchange fire.
Homebuyers reacted to the growing uncertainty by pulling back from the market this summer, with pending home sales falling 5.4% in June in response to rising mortgage rates.
"Would-be buyers, especially first-timers who tend to carry larger loans, are the most exposed to each uptick in borrowing costs, while owners holding sub-4% rates have little reason to list and swap into today's market," explains Smith.
That lock-in continues to constrain inventory even as the sellers who do list increasingly price more realistically from the start to meet buyers where they are.
"With the Fed signaling that its next move is more likely a hike than a cut, near-term rate relief looks unlikely," concludes Smith.
How your credit score affects your mortgage
Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you'll receive. The higher the credit score, the lower the interest rate you'll qualify for.
The credit score you need will vary depending on the type of loan. A score of 620 is a "fair" rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.
Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates, which can reduce monthly payments.
Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. Ultimately, they want to make sure you're able to pay back the loan.