Last week the Fed raised rates for the first time in three years, and I’ve heard one question more than any other: does that mean mortgage rates just went up? Let me clear that up.
The Fed does not set mortgage rates. It controls the overnight rate, which has a quicker effect on HELOCs, credit cards, and other adjustable rate loans. Mortgage rates follow the 10-year Treasury, inflation expectations, and economic growth. That’s why the bond market’s reaction to the hike has been fairly calm. Remember, two years ago the Fed cut by half a point and mortgage rates rose anyway.
Here’s where rates stand: Freddie Mac’s weekly average climbed about two-tenths of a percent, and daily rates are near their highest levels since early 2025. Hopeful headlines about talks with Iran brought a brief reprieve early this week as oil prices eased. Then Wednesday morning, oil ticked back up and new reports showed business activity in services and manufacturing at its strongest in years. Add in August retail sales jumping 1.2 percent, and that economic strength sent Treasury yields sharply higher. Markets are now leaning toward more Fed hikes before year end.
For buyers, leverage is real. Redfin reports 58 percent more sellers than buyers nationwide, the widest gap on record. Prices are still up 3.7 percent from last year, so the win isn’t a big discount. It’s negotiating power: seller-paid closing costs, rate buydowns, and time to choose well.
Mark your calendar for September 27 through October 3. Realtor.com named it the best week of the year to buy, with more listings, less competition, and prices about $14,000 below this year’s peak. Builders are motivated too: 66 percent are offering incentives and 38 percent have cut prices. Just be sure you know whether a builder buydown is temporary or permanent before you sign.
My best tip: if your pre-approval is more than a month old, let’s refresh it now so you’re ready when the right home appears.
I invite you to call or text me at 818.307.6072 or simply reply to this email. I’m always happy to run numbers for you and help you make the best move on your next home.
