Mortgage rates have already had a rough couple of weeks.
But it could get even worse if a pair of inflation reports come in hot later this week.
We’ve got both the Producer Price Index (PPI) and Consumer Price Index (CPI) being released this week, with the potential to make or break a Fed rate hike next week.
There’s also surging oil prices, more aggressions in the Middle East, and retaliatory tariffs to worry about.
None of it seems to bode well for mortgage rates, which are already on the cusp of a return to 7%.
Are Mortgage Rates Going to Hit 7% Again?
It’s going to be another turbulent week for mortgage rates, which currently sit at their highest levels since last June.
The 30-year fixed is currently averaging 6.89% according to the daily index from Mortgage News Daily.
It was a slightly higher 6.91% a week ago, but remains stubbornly high due to myriad factors.
The biggest one continues to be the Iranian war, which has sent oil prices surging.
Over the weekend, Houthi attacks on Saudi Arabian energy facilities pushed the price of Brent crude up to nearly $100 per barrel.
And there are fears prices could rise a lot more from here, with consumers already feeling it at the pump and elsewhere.
That oil price shock is making its way into prices on just about everything, leading to higher inflation readings again.
Making matters worse is retaliatory tariffs from Canada on anything from U.S. milk to perfume.
All of it boils down to price pressure. The cost of everything was already expensive, and this just makes it worse.
Inflation has been top of mind for years now, with the Fed hiking rates 11 times to combat it.
But then it seemed to finally get under control, allowing a few cuts beginning in September 2024.
Progress made on that front allowed mortgage rates to fall to the lowest levels since late 2022 earlier this year.
The 30-year fixed was sub-6% and the housing market was showing signs of life again.
There was also a nice little refinance boom, with lots of recent home buyers taking advantage of a rate and term refinance.
However, it proved to be very short-lived. Out of seemingly nowhere there were strikes on Iran that pushed rates up nearly a full percentage point in the months that followed.
PPI and CPI Could Sway the Fed to Hike Rates at September Meeting
This week’s PPI and CPI reports are super important. They’re the last major data points the Fed has to go on before its September meeting.
They could make or break the decision to hike rates a ¼ point or stand pat.
At last glance, the odds of a hike are just over 60%, according to CME FedWatch.
That’s up from around 44% a month ago, thanks in part to a hot jobs report in August and more tensions in the Middle East.
But the Fed has a new look with Trump’s appointee Kevin Warsh, who is attempting to convince everyone that hikes aren’t needed.
That there will be a massive supply shock due to AI productivity gains, leading to lower prices over time.
Of course, even if true, when exactly will that take place? It could be years…or longer.
In the meantime, the Fed will need to convince everyone that monetary policy is restrictive enough as-is, which could be tricky.
Just remember the Fed doesn’t set mortgage rates and only makes move based on the underlying economic data, which is what drives mortgage rates.
The 7% Mortgage Rates Are Almost Here
Today, you’re looking at a mortgage rate on the cusp of 7%, perhaps 6.875% or higher.
Back in February and early March you were maybe looking at a rate of 5.875%. That’s a huge difference.
It’s also a massive psychological hit. It seems anytime we make progress, there’s a setback.
And you see it in home sales, which have remained near 30-year lows for the past 3-4 years, with this year shaping up to be no different.
If mortgage rates don’t turn around soon, we could see inventory spike again, putting some serious pressure on home prices.
So there’s a lot at stake here. As I’ve mentioned before, the difference in monthly payment for a rate of 6.875% and 7% is negligible.
But if prospective home buyers start seeing scary headlines that mortgage rates are back at 7%, it will likely give them pause.
That could have knock-on effects for the housing market, pushing more people to remain in place, quite possibly because they’re rate-locked.
With a 2-3% mortgage rate, the thought of trading it for a 7-handle might be unthinkable.
- Two Big Inflation Reports Could Push Mortgage Rates Back to 7% This Week - September 8, 2026
- No Relief for Mortgage Rates as August Jobs Report Comes in Hot - September 4, 2026
- Mortgage Rates Are at New 2026 Highs, But There’s a But - September 2, 2026