09/17/2026
🏠 THE FED RAISED RATES… SO DID MORTGAGE RATES GO UP ¼%?
Not necessarily! This is one of the biggest misconceptions I hear from homebuyers.
When the Federal Reserve raises or lowers the Federal Funds Rate by 0.25%, it does NOT mean that 30-year mortgage rates automatically move by 0.25% in the same direction.
Why? Because mortgage rates and the Federal Funds Rate are different things.
The Federal Funds Rate is a short-term rate that the Fed uses to influence borrowing and economic activity. Fixed mortgage rates, on the other hand, are much more closely tied to the bond market, particularly longer-term Treasury yields and mortgage-backed securities (MBS).
📈 What actually influences mortgage rates?
Mortgage rates can be affected by:
• Inflation & inflation expectations — Higher expected inflation generally puts upward pressure on longer-term rates.
• The 10-year Treasury yield — This is one of the important benchmarks for understanding the direction of 30-year fixed mortgage rates. They often move together, but NOT perfectly.
• The bond & mortgage-backed securities markets — Investors buy and sell mortgage-backed securities, and changes in investor demand can influence mortgage pricing.
• Economic growth & employment — Expectations about the economy can influence where investors believe interest rates are headed.
• Federal Reserve policy — Fed decisions matter, but their effect on mortgages isn't a simple 1-to-1 relationship.
• Your individual financial picture — Credit score, down payment, loan type, property type, loan amount and other characteristics can affect the rate a lender offers you.
🤔 So what happens when the Fed changes rates?
Sometimes mortgage rates go up after a Fed increase.
Sometimes they go down.
Sometimes they barely move.
And sometimes mortgage rates move before the Fed actually makes a decision, because financial markets are constantly reacting to expectations about what the Fed and the economy will do next.
Bottom line:
A 0.25% Fed rate change does NOT automatically equal a 0.25% change in your mortgage rate.
If you're thinking about buying or refinancing, don't assume you need to wait for the next Fed announcement. Mortgage rates are influenced by a much bigger picture.
🏡 Questions about what today's rate environment could mean for your home-buying or selling plans? Let's talk! I can connect you with a reputable, trustworthy loan officer that can help!
* Information provided for educational purposes; mortgage rates and individual loan terms vary by borrower and lender.
