Mortgage rates fell to 6.61% on Monday as the Federal Reserve prepares for a closely watched interest rate decision on Wednesday, July 29, with markets sharply divided over whether the central bank will hold steady or raise rates for the first time in months.
According to NerdWallet, the average interest rate on a 30-year fixed-rate mortgage dropped six basis points to 6.61% APR on July 27, compared to the prior day. Freddie Mac’s weekly survey earlier in the week had put the 30-year fixed rate at 6.58% as of July 23, up three basis points from the previous week, marking a fourth consecutive week of elevated rates near six-month highs.
The rate decline comes as bond markets and investors grapple with conflicting signals ahead of the Federal Open Market Committee meeting scheduled for July 28-29. The Fed is expected to announce its decision at 2 p.m. ET on Wednesday, with a press conference to follow at 2:30 p.m. ET led by Fed Chair Kevin Warsh.
Economists polled by FactSet predict the Fed will hold interest rates steady at 3.5% to 3.75%, which would mark the fifth consecutive meeting with no change. However, market uncertainty is unusually high. Futures markets put the chances of the Fed holding rates at 62% as of July 27, down sharply from 87% just one week earlier, while chances of a rate hike have risen to 37%, up from just 12%, according to Yahoo Finance data.
The shift reflects rising concerns about inflation persistence. Oil prices have surged in recent weeks, topping $100 a barrel last week amid Middle East tensions, fueling worries that energy costs could translate into broader price pressures. At the same time, the June core Consumer Price Index, which excludes volatile food and energy prices, dropped to 2.6% from 2.9%, offering some relief and bolstering the case to hold rates steady, according to Yahoo Finance analysis.
Fed officials are split. At the Fed’s June meeting, nearly half of policymakers signaled they would support a rate hike later this year, while others favor holding steady. Dallas Fed President Lorie Logan has argued the time is now to act, stating in mid-July that “inflation has been too high for too long.” By contrast, New York Fed President John Williams suggested in mid-July that inflation has likely peaked and should edge down in coming quarters, supporting a hold.
Former Kansas City Fed President Esther George told Yahoo Finance there is a 50-50 chance the Fed will either hold rates steady or raise them. “It wouldn’t surprise me if they hiked by 25 basis points at this meeting,” she said, though she added that September appears more likely as a timing for action.
Mortgage rates closely track yields on the 10-year Treasury bond, which reflect investor expectations about inflation and Fed policy. The decline in mortgage rates on July 27 followed a dip in the 10-year Treasury yield to 4.647% from 4.683%, signaling some easing in inflation expectations despite elevated oil prices.
Gregory Daco, chief economist for EY-Parthenon, noted that while a July rate hike remains highly unlikely, the September FOMC meeting could become a meaningful test. “Our base case remains that the Fed will stay on hold through the rest of the year, but it’s a 60-40 call,” he said, according to CBS News.
Sources
- NerdWallet — Reported 30-year fixed mortgage rate at 6.61% APR on July 27, 2026.
- Freddie Mac — Reported 30-year fixed rate at 6.58% for the week ending July 23, 2026.
- CBS News — Covered Fed meeting expectations, economists’ predictions, and expert commentary on inflation and rate decision timing.
- Yahoo Finance — Reported market odds (62% hold, 37% hike), Treasury yields, inflation data, and expert analysis from former Fed officials.
- The Mortgage Reports — Provided daily mortgage rate data and market context for July 27, 2026.
