Will mortgage rates improve after this week's Fed meeting?

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The Federal Reserve will hold its fifth meeting of 2026 this week, and, for the first time in multiple years, the potential for an interest rate hike at the central bank's two-day meeting can't be easily dismissed. According to the CME Group's FedWatch tool, there's around a 35% chance the central bank increases interest rates this week.

While that hike, if it happens, is likely to just be by 25 basis points, it will send ripples throughout the wider borrowing space and cause elevated borrowing interest rates to rise even further. This is a serious concern for millions of borrowers but especially those looking to purchase a home or refinance their current one.

After dropping by around a full percentage point in 2025, the average mortgage interest rate spiked again in recent months against the backdrop of geopolitical tensions, overseas conflicts, a surging oil price and elevated inflation. So any relief that borrowers can secure in this space, even if it's minimal, will be welcome. But is that what's likely to happen after this week's Fed meeting? Will mortgage rates improve or can borrowers expect them to hold steady or even rise again? That's what we'll examine below.

This is why locking a rate in the days prior to the meeting could be worth considering. If rates drop in the short-term, borrowers can always unlock their existing one and re-lock the new one. In the interim, however, they'll be protected from any rate hikes still ahead, even if they occur minus a formal Fed rate hike.

Without a Fed meeting on the calendar until September, however, borrowers will also need to look toward other drivers that could cause rates to rise or fall. The 10-year Treasury yield, for example, can impact mortgage rates as can new unemployment and inflation reports that are released in August. And items related to the war with Iran, oil prices and more all have the potential to dramatically impact rates here, sometimes within the same day or overnight.

So, in short, mortgage rates don't appear likely to improve once this week's Fed meeting concludes, underlining the importance of locking in one of today's imperfect options before they rise even further.

Learn more about your mortgage interest rate lock options here.

While mortgage rates in the mid to high 6% range aren't ideal now, especially compared to what was available earlier this year, there are still ways in which borrowers can secure a below-average rate. By adding mortgage int