The Federal Reserve raised interest rates, and whether directly related or not, mortgage rates followed. With home loan rates now effectively at 7%, what will it take for mortgage rates to reverse course and move lower?

Are mortgage rates dropping?

No. As of Sept. 17, Freddie Mac reported that the average 30-year fixed-rate mortgage rate was 6.95%. This is 19 basis points higher than last week. At this time in September 2025, mortgage rates averaged 6.26%, 69 basis points lower.

The average 15-year fixed mortgage rate this week was 6.26%, up 17 basis points from last week, and 85 basis points higher than this time last year.

Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of Sept. 17, 2026:

• 30-year fixed-rate mortgage: 5.98% to 6.95%
• 15-year fixed-rate mortgage: 5.35% to 6.26%

Will mortgage rates trend down by the end of 2026?

Mortgage rates generally move in unison with the bond market, which has been volatile lately. The 10-year Treasury yield has topped 5% repeatedly in the past week for the first time since 2023, and home loan rates are tagging along. 

Mike Miedler, president and CEO of Century 21 Real Estate, believes the Fed’s quarter-point interest rate hike is one step in the fight against inflation — and an adjustment to the housing market.

“While I don’t expect one Fed meeting to change the housing market overnight, what matters now for Americans is whether their entire financial picture starts to feel more manageable — their monthly housing payment, their paycheck and what they’re spending everywhere else,” Miedler said in a statement.

He noted that home affordability is about more than just a mortgage rate.

“Families are making a housing decision alongside the cost of groceries, gas, childcare and everything else in their budget. If today’s decision helps bring those costs down, that matters for housing affordability too.”

Fannie Mae’s September forecast projects mortgage rates to be near 6.7% through 2027.

The Fed is on an inflation-rate hike watch

Following the Federal Reserve’s first interest rate increase in three years, the Federal Open Market Committee (FOMC) signaled it is leaning toward another 0.25% hike before year-end.

The federal funds rate tends to directly influence rates on shorter-term lending rates. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed funds rate trends. 

So, if the fed funds rate goes up, mortgage rates are likely to follow.

Dig deeper into how the Federal Reserve affects mortgage rates.

Keep an eye on 10-year Treasury yields

While short-term lending rates closely follow the Fed funds rate, mortgage rates track the 10-year Treasury yield even more closely. As of Sept. 16, the 10-year Treasury yield opened at 4.95% — compared to 4.11% a year prior. 

Now, you’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?

To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the 10-year Treasury rate. Without getting too much into the weeds, charging a spread helps mortgage lenders cover the costs of making loans to the public and the risk of providing them.

Mortgage spreads widened over the past few years, exceeding two percentage points. As bond yields have risen over the past six months, the spread has narrowed slightly but remains near two percentage points. 

For example, the average 30-year fixed mortgage rate is 6.95%, and the 10-year Treasury yield is 4.95% — a spread of 2.0 percentage points.

Should you wait to buy until mortgage rates go down even more?

In short, no. You don’t necessarily need to wait to buy a home until mortgage rates drop below 6% or lower. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, driven by housing supply and demand.

The current housing market is in a crunch. Simply put, buyers outnumber homes for sale, especially in price ranges accessible to first-time homebuyers. When supply and demand are out of balance like this, home prices tend to stay high because sellers know they’ll have multiple interested buyers. 

According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has mostly trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $410,700 by Q2 2026.

Even in a recession, prospective buyers likely won’t see much relief. If interest rates drop, as they tend to in recessions, that will increase the number of people looking to buy and lock in a lower rate. That drives up demand for the already limited supply of homes. 

To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are holding steady, and housing prices are stagnant or even lowering in certain parts of the country. Situations may be improving for buyers.

Strategies for buyers in today’s mortgage market

If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.

Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.

Get curious

There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.

You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.

Consider a fixer-upper

If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the renovation costs into an escrow account. As you make repairs, funds get disbursed.

Rethink your commute

How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering various amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.

Go condo

While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.

Consider a 15-year mortgage

While the monthly payment on a 15-year mortgage will be higher than a typical 30-year mortgage, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.

Explore rate buydowns

To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary, like for your loan’s first one to three years. E