‘My primary concern is inflation’: Fed’s Schmid pushes rates higher as mortgages hit 6.69%. Make high rates work for you

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Americans who have spent years waiting for cheaper mortgages may face another painful disappointment.

The average 30-year fixed mortgage rate climbed for a fifth straight week to 6.69% as of Aug. 6 — its highest level since July 2025, according to Freddie Mac (1).

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Now, Federal Reserve Bank of Kansas City President Jeff Schmid is arguing (2) that monetary policy may not be tight enough.

“My primary concern is inflation,” Schmid said in an Aug. 4 speech. He called inflation “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. But he isn’t alone: The Fed held its benchmark rate at 3.5% to 3.75% (3) at its latest meeting, while three officials voted for a hike.

That spells trouble for Americans hoping to buy real estate.

At 6.69%, principal and interest on a $400,000 30-year mortgage would cost approximately $2,578 per month. At February’s brief low of 5.98%, the same loan would have cost about $2,393.

That’s roughly $185 more per month, or over $2,200 per year, before property taxes, insurance and homeowners association fees.

Mortgage relief is out of reach

The Fed doesn’t directly set mortgage rates. However, its decisions influence bond-market expectations and borrowing costs throughout the economy.

Mortgage rates tend to follow the 10-year Treasury yield, which recently reached 4.65%. That’s up sharply from 3.97% before the U.S.-Iran conflict began in February, according to the Associated Press (4).

The conflict helped drive oil prices higher, renewing fears that energy costs could reignite inflation. In June, consumer prices were 3.5% higher than one year earlier, while energy prices had surged 15.7% and gasoline prices had jumped 26.7%, according to the Bureau of Labor Statistics (5).

There were some encouraging signs. Overall prices fell 0.4% between May and June, while core inflation — which excludes volatile food and energy costs — was 2.6% year over year.

The next major test arrives Aug. 12, when the BLS releases July’s inflation report. A hotter-than-expected number could strengthen the case for another rate hike and place additional upward pressure on borrowing costs.

Homebuyers can’t control the Fed or the bond market. But they can reconsider how they approach real estate, shop more carefully for financing and position their savings to benefit from higher rates.

Read More: Millionaires under 43 hold only 25% of their wealth in stocks. Here’s where their money is actually going

Get into real estate without taking out a 6.69% mortgage

Buying a rental property outright usually requires a large down payment, mortgage approval, closing costs and enough cash to cover maintenance, taxes and unexpected vacancies. At today’s rates, financing those expenses could make it much harder for a property to generate positive cash flow.

Platforms like Arrived let you buy shares in rental homes, potentially earn dividends and leave the property management to someone else.

Backed by investors including Jeff Bezos, Arrived offers SEC-qualified investments starting at $100. Both accredited and non-accredited investors can browse vetted properties, select one and choose how many shares to buy.

For a limited time, open an account and add at least $1,000 and Arrived will credit your account with a 1% match.

However, fractional investments won’t provide the control or personal use that comes with owning a home and real estate investments can lose value.

Still want the keys? Make lenders compete

For Americans determined to buy a home, the rate quoted by one lender is not necessarily the rate they must accept.

Mortgage offers can vary based on the lender, loan type, credit score, down payment and fees. Even a difference of a quarter of a percentage point can translate into thousands of dollars over a long mortgage term.

Freddie Mac (6) recommends obtaining quotes from three to five lenders to secure the best mortgage rate possible.

To make this process easier, places like the Mortgage Research Center (MRC) can help you quickly compare rates and estimated monthly payments from multiple vetted lenders.

By entering basic details — such as your zip code, property type, price range and annual income — you can view mortgage offers tailored to your needs.

Homebuyers should also avoid stretching their budget because they expect the Fed to cut rates later. Refinancing may be possible if rates fall, but there is no guarantee that they will and refinancing comes with a new round of fees and qualification requirements.

Make higher rates pay you on your savings

Higher rates punish borrowers, but they can reward savers.

A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.

A Wealthfront Cash Account currently offers a base APY of 3.30% through program banks and new clients can get an extra 0.75% boost during their first three months on up to $150,000 for a total variable APY of 4.05%.

That’s 10 times the national deposit savings rate, according to the FDIC’s June report.

Additionally, Wealthfront is offering new clients who enable direct deposit ($1,000/monthly minimum) to their Cash Account and open and fund a new investment account an additional 0.25% APY increase with no expiration date or balance limit, meaning your APY could be as high as 4.30%.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.

For money that won’t be needed immediately, certificates of deposit (CDs) may offer another way to capitalize on elevated rates. A CD locks in a fixed yield for a set term, which can protect savers if market rates fall later.

To find competitive options, a platform like CD Valet can help you compare CDs for different savings goals and timelines.

CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.

Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.

One option is building a CD ladder by dividing savings across CDs with different maturity dates. This provides periodic access to part of the money while locking in rates on the remainder.

Don’t gamble your financial plan on the Fed

Trying to predict the Fed’s next decision can be tempting, especially when one move could affect mortgages, savings yields, bonds and stock prices.

But delaying an important financial decision solely because rates might change is also a gamble.

Someone planning to buy a home should test the payment against today’s income and expenses, not a hoped-for future refinance. Savers should balance attractive yields against liquidity needs, while retirees need to consider how each decision affects taxes, income and the longevity of their nest egg.

A financial advisor can help you weigh buying a home, investing and making the most of higher interest rates without losing sight of your retirement goals.

Advisor.com offers a free service that matches you with advisors based on your finances, goals and preferences.

Its network includes fiduciaries who are legally required to act in your best interests and advisors are vetted based on their track records, client ratios and regulatory backgrounds.

After answering a few questions, you’ll be matched with a qualified advisor and can schedule a free, no-obligation initial consultation to decide whether they’re the right fit for you.

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Article Sources

We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.

Freddie Mac (1); Reuters (2); CNBC (3); Associated Press (4); Bureau of Labor Statistics (5); Freddie Mac (6)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.