US Mortgage Rates Climb as Fed Keeps Interest Rates Unchanged

US mortgage rates rose to 6.78% after the Federal Reserve maintained its policy stance, despite keeping interest rates unchanged.

The decision, made on July 29, led to a two basis point increase in the 30-year fixed mortgage rate and a six basis point climb in the 10-year Treasury yield.

Chair Kevin Warsh stated that the Fed 'will not waver,' but this did little to ease concerns for housing finance. In fact, the tightening of the gap between mortgage rates and Treasuries suggests that pressure is coming from long-term yields rather than issues unique to the mortgage market.

The shift resulted in a steeper yield curve, with long-term yields climbing more than short-term yields. This scenario tends to be more challenging for mortgage borrowers.