Mortgage Interest Rates Forecast

Mortgage rates inched higher this week, with the average 30-year fixed climbing to 6.35% APR, according to rates provided to NerdWallet by Zillow.

That’s a small bump — just two basis points — but it stands out after two straight weeks of sharper declines leading up to the Federal Reserve’s September meeting. Even though the Fed did cut its key rate as expected, mortgage rates didn’t keep falling. Instead, they’ve bounced back up. Why?

The short answer: mortgage rates don’t move exactly in step with the Fed’s decisions. Lenders had already priced in expectations for a rate cut, which is why rates dipped to just above 6% before the Fed even announced its move. But once that decision was behind them, rates started trending higher again, largely because of rising yields on the 10-year Treasury bond — a key benchmark for mortgage pricing. Higher bond yields signal investor confidence in the economy, but they also push mortgage rates upward.

» MORE: Is it a good time to buy a house? Here's what to consider.

September Mortgage Rates Forecast

The Fed’s Sept. 17 decision shows just how tricky the current economic moment is. On one hand, the job market is softening, which makes cutting rates appealing to help businesses and workers. On the other, inflation is still a concern, and higher rates usually help keep prices under control. By choosing to cut, the Fed signaled it sees jobs as the bigger risk right now.

Still, Fed Chair Jerome Powell stressed that the future is uncertain, and mortgage experts agree: where rates go next will depend on upcoming economic data. It's not a guaranteed downward trend.