Fed Rate Hike Hits Home: Higher Interest Rates Ahead

The Federal Reserve raised its benchmark interest rate by 0.25% on September 16, bringing it into the 3.75% to 4% range.

This is the central bank's first rate hike since July 2023, driven by stubborn inflation that has persisted above the Fed's 2% target for more than five years.

The new interest rates will have an indirect impact on long-term borrowing costs, such as mortgages. The average 30-year fixed mortgage rate has reached its highest level since July 2025 at 6.76%, according to Freddie Mac.

Mortgage rates are unlikely to see much immediate movement due to their influence by longer-term market expectations. However, the rate hike will increase the cost of a new mortgage by around 11 basis points, or roughly $9,720 over the life of the average 30-year mortgage.