US 30-Year Fixed Mortgage Rates Jump to 7.12% Amid Fed Rate Hike and Geopolitical Tensions

The average US fixed 30-year mortgage rate increased by 15 basis points to 7.12 per cent during the week ending September 18, according to data from the Mortgage Bankers Association. This rate surge followed the Federal Reserve raising the benchmark rate by 25 basis points to a range between 3.75 per cent and 4.00 per cent. The rate hikes were implemented to curb inflation, which had remained above the central bank's 2 per cent target for five and a half years. The rise in lending costs was also linked to joint military actions involving the United States and Israel against Iran, which elevated energy markets.

The rate increases were the highest recorded since May 2024. The Federal Reserve's actions, led by Jerome Powell, are designed to steer inflation toward a more manageable trajectory. The increases in lending costs reflect the pressure from both the Fed's monetary policy and external shocks to global energy markets.

Geopolitical developments are originating from the Middle East, involving tensions between the U.S. and Iran, potential new economic sanctions, and Israel's attacks on Lebanon.