The average 30-year mortgage rate climbed to 6.69% on Aug. 6, its highest level since July 2025, as Federal Reserve Bank of Kansas City President Jeff Schmid pushed for tighter policy to fight inflation. Three Fed officials already voted for a rate hike at the central bank's latest meeting, and the next inflation report lands Aug. 12.
Federal Reserve Bank of Kansas City President Jeff Schmid is pushing for tighter monetary policy even as mortgage costs keep climbing for American homebuyers. The average 30-year fixed mortgage rate rose for a fifth straight week to 6.69% as of Aug. 6, its highest level since July 2025, according to Freddie Mac.
Schmid pushes for tighter policy
Schmid said in an Aug. 4 speech: "My primary concern is inflation." He described inflation as too high and said returning it to the Fed's 2% target will require tighter policy.
Schmid didn't specify when or by how much rates should rise. Still, he isn't alone — the Fed held its benchmark rate at 3.5% to 3.75% at its latest meeting, while three officials voted for a hike.
Mortgage costs climb further
At 6.69%, principal and interest on a $400,000 30-year mortgage would run about $2,578 a month, up from about $2,393 at February's brief low of 5.98%. That gap works out to roughly $185 more each month, or more than $2,200 a year, before property taxes, insurance and homeowners association fees.
Treasury yields track the pressure
The Fed doesn't directly set mortgage rates, but its decisions shape bond-market expectations and borrowing costs across the economy. Mortgage rates tend to follow the 10-year Treasury yield, which has climbed to 4.65%, up from 3.97% before the U.S.-Iran conflict began in February, according to the Associated Press.
That conflict helped push oil prices higher, renewing fears that energy costs could reignite inflation. In June, consumer prices were 3.5% higher than a year earlier, while energy prices surged 15.7% and gasoline prices jumped 26.7%, according to the Bureau of Labor Statistics. Still, overall prices fell 0.4% between May and June, and core inflation, which excludes volatile food and energy costs, was 2.6% year over year.
July inflation data looms
The next major test arrives Aug. 12, when the Bureau of Labor Statistics releases July's inflation report. A hotter-than-expected number could strengthen the case for another rate hike and add more upward pressure on borrowing costs.
Source: Moneywise
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