Fed Minutes Point to Another Rate Hike, Pushing Mortgage Rates Higher

Mortgage rates have climbed to a three-year high of more than 7% in recent weeks, as a global sell-off in bonds pushed long-term borrowing costs up. Now the Federal Reserve's latest meeting minutes suggest the central bank is not finished tightening. Policymakers see another interest rate hike as likely before the end of the year.

The minutes show officials still worried that inflation is not cooling quickly enough. Their reasoning points to a central bank that wants more convincing evidence before it eases up, which leaves little room for near-term relief on borrowing costs.

Mortgage rates tend to follow long-term Treasury yields more closely than the Fed's short-term policy rate, so the bond market has done much of the recent damage. A further Fed increase could keep pressure on those yields, and borrowers hoping for lower payments next year may find that hope pushed further out.

For buyers, the squeeze is already showing up in monthly payments. For sellers and agents, it means the spring market may start from a weaker position than many had expected, with affordability still stretched. Anyone with a home loan decision coming up should watch the next Fed statement and the movement in Treasury yields closely.