Mortgage rates moved higher during the week ending July 16, making home financing more expensive for buyers already dealing with elevated property prices and limited affordability.
The average annual percentage rate on a 30-year fixed mortgage increased by eight basis points to 6.47%, according to mortgage-rate information supplied to NerdWallet by Zillow. One basis point equals one-hundredth of a percentage point. NerdWallet calculates its weekly figure by averaging daily APRs from the five most recent business days. The latest reading was the highest weekly average recorded since shortly after Labor Day in September 2025.
There are competing forces that could influence where mortgage rates go next, although additional increases appeared more likely than a meaningful decline at the time of the report.
The strongest argument for lower rates came from the June Consumer Price Index. The Bureau of Labor Statistics released the report on July 14, showing that inflation cooled more than economists had anticipated. Average mortgage rates responded by falling eight basis points on the following Wednesday. June’s CPI data was also expected to be the latest major inflation reading available when Federal Reserve officials gathered for their July 28-29 policy meeting. The Fed’s preferred inflation measure, the Personal Consumption Expenditures index, was not scheduled for release until July 30, one day after the meeting ended.
The inflation report covered a period before the collapse of the ceasefire involving Iran, however, limiting how accurately it reflected the latest economic risks. Futures-market participants were largely expecting the Federal Reserve to leave its benchmark interest rate unchanged in July. Growing confidence in an unchanged decision could allow mortgage rates to ease modestly, but traders assigned only a small probability to an immediate rate increase.
The case for rates moving higher was considered stronger. No other major economic reports were scheduled for release during the following week, leaving geopolitical developments and energy prices as the most important potential market drivers.
Renewed fighting and the naval blockade surrounding Iran had caused crude-oil prices to jump approximately 10% over five days. Rising oil prices can create expectations that gasoline, shipping, manufacturing and other business costs will increase, potentially feeding inflation throughout the economy.
When lenders become concerned that inflation will weaken the future purchasing power of the money they receive from mortgage payments, they may raise borrowing rates to protect their returns. Higher inflation expectations can also increase speculation that the Federal Reserve will raise its overnight benchmark rate during a future meeting.
The federal funds rate does not directly determine consumer mortgage rates, but an increase can raise lenders’ financing costs. Those additional expenses may then be passed on to borrowers. Mortgage companies also frequently adjust their offers before the Federal Reserve makes a decision, meaning the expectation of a future rate increase can push mortgage rates higher even when officials have not yet changed policy.
Elevated borrowing costs are affecting buyers differently depending on the housing market in which they are searching. Realtor.com’s June ranking of the country’s hottest housing markets measured demand using the number of unique online views received by each property and the amount of time listings remained available.
Three of the five hottest metropolitan areas were located in Connecticut: Hartford, Norwich-New London and Waterbury-Shelton. Erie, Pennsylvania, and Kenosha, Wisconsin, completed the top five. Properties in those markets had median listing periods ranging from 29 to 32 days.
Among the top 20 markets, Binghamton, New York, had the lowest median listing price at $227,000. At the week’s 6.47% average mortgage rate, NerdWallet estimated that a buyer making a 10% down payment would face a monthly housing payment of approximately $1,877.
Bridgeport-Stamford-Norwalk, Connecticut, had the highest median listing price among the ranked markets at $849,000. A buyer purchasing at that price with 10% down would have an estimated monthly payment of approximately $7,022 at the same average mortgage rate.
Most of the hottest housing markets were midsized metropolitan areas positioned outside major and more expensive cities such as Boston and New York. The Northeast dominated the ranking, accounting for 16 of the top 20 markets, while the Midwest supplied the remaining four.
Wisconsin was the only state outside the East Coast to place markets in the top 20, with Kenosha, Racine and Oshkosh-Neenah appearing on the list. Homeowners selling properties in particularly competitive markets may be able to receive stronger offers, potentially helping them absorb the cost of a higher mortgage rate when purchasing their next home.
Buyers without a highly desirable property to sell can still take steps to reduce their financing costs. Comparing quotes from several mortgage lenders may reveal meaningful differences in interest rates, fees and closing expenses. Borrowers can also strengthen their financial profiles by paying down existing debt, improving their credit standing and reducing their debt-to-income ratios before applying for a loan.
Higher current rates do not automatically mean refinancing is a poor decision. Homeowners who obtained mortgages when rates regularly hovered near 7% during 2023, 2024 or early 2025 could still find opportunities to lower their monthly payments or total interest costs. The potential savings would depend on the borrower’s existing rate, closing costs, remaining loan balance and expected length of time in the home.
Source: NerdWallet
