Mortgage Interest Rates Today: Mortgage Rates Climb as Doubts Rise Over Future Fed Cuts

Mortgage rates rose Thursday for the first time in over a month, as markets reacted to the Federal Reserve‘s cautious outlook for the near future following last week’s quarter-point cut to its benchmark interest rate.

The average rate on 30-year fixed home loans increased to 6.3% for the week ending Sept. 25, up from 6.26% the week before, according to Freddie Mac. Rates averaged 6.08% during the same period in 2024.

“Following several weeks of decline, mortgage rates inched up this week,” says Sam Khater, Freddie Mac’s chief economist. “Housing market activity continues to hold up with purchase and refinance applications increasing by 18% and 42%, respectively, compared to the same time last year.”

As anticipated, during the Federal Open Market Committee (FOMC) meeting on Sept. 17, the Fed’s policymakers voted to lower the federal funds rate by 25 basis points to a range of 4.0% to 4.25%, their first cut since December 2024, to head off economic risks associated with a softening job market and persistent inflation.

The decision by the Fed’s Board of Governors was accompanied by a release of its Summary of Economic Projections, and Chair Jerome Powell stressed that the path of interest rates for the rest of the year “is not a preset course” and will depend on incoming data and the “balance of risks.”

Speaking at the Greater Providence Chamber of Commerce in Warwick, RI, on Tuesday, Powell said the economy is facing a “challenging situation” as he reiterated the Fed’s dual mandate to maintain stable prices and maximum employment.

“Investors had been hoping for clearer confirmation of additional cuts in 2025, and the gap between those expectations and the Fed’s messaging pushed the 10-year Treasury yield, and mortgage rates, higher,” says Realtor.com® Senior Economic Research Analyst Hannah Jones.

But even with Thursday’s uptick of 4 basis points, mortgage interest rates remain near 11-month lows, creating opportunities for both prospective buyers and existing homeowners considering a refinance.

“For buyers, the current rate environment is delivering a meaningful boost to affordability,” explains Jones.

At the current 6.3% level, the monthly mortgage payment on a typical home is appreciably lower than it would have been at last year’s highs.

“That shift can make the difference for first-time buyers stretching their budgets, particularly in high-cost metros,” adds the analyst.

Seasonal dynamics are also working in home shoppers’ favor, with more listings to choose from, less competition, and a measured price growth during the best time to buy compared to the summer peak.

“Lower mortgage rates are the cherry on top, especially for buyers looking to secure a home this year,” says Jones. “And for those willing to put in a little elbow grease, recent research highlights the best markets for finding affordable fixer-uppers, an attractive path for households prioritizing value.”

How mortgage rates are calculated

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates to fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

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.

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. They want to make sure you’re able to pay back the loan.