As expected, the Fed raised the benchmark Federal Funds Rate by 25 basis points last week, marking the first increase in three years. This update covers what that means for mortgage rates, where things stand ahead of the next FOMC meeting, and a strategy worth considering if you're buying or selling right now.
The decision was unanimous, with inflation cited as the main reason. Keep in mind, the Fed Funds Rate is the rate banks charge each other overnight — it’s not the same as your mortgage rate. Looking ahead, the Fed’s latest projections suggest another hike could be coming before year-end. Sixteen of 18 officials now think the rate will be higher by December. In housing, new construction cooled in August, and builder confidence stayed low due to higher mortgage rates, labor shortages, and rising costs. The resale market showed more strength, with pending home sales up 0.3% from July to August, though they’re still 4.7% below year-ago levels. Buyers are still moving forward, even with higher rates. NAR’s chief economist, Lawrence Yun, noted that buyers were “steadily entering into contracts” last month. In the broader economy, retail sales jumped 1.2% in August, with 12 out of 13 categories showing gains. Initial unemployment claims stayed low at 196,000, while continuing claims remained high at 1.73 million. Mortgage rates have also been trending higher since the conflict in Iran, adding more uncertainty to an already volatile market.
The Optimal Blue index shows the average 30-year fixed rate at 7.038% as of September 18th — the highest since May 2024. A quick note: this index reflects about 35% of mortgage transactions nationwide. It’s not a rate quote, so you can’t lock in last week’s rate today. Your credit score, loan-to-value ratio, and other factors will all affect what you actually qualify for. This is just a general sense of where rates are heading. If you want to see current rates based on your personal situation, check out the link below.
Click here: If you would like to see current mortgage rates based on your personal scenario for your home located anywhere in Washington.
This week’s economic calendar is pretty light:
- Monday: No major economic news
- Tuesday: ADP Weekly
- Wednesday: Mortgage Applications
- Thursday: Jobless Claims, New Home Sales
- Friday: Durable Goods Orders
The next FOMC meeting is October 27–28, 2026, and the CME FedWatch tool shows a 55% chance of another 25 basis point increase.
Mortgage-backed securities were up 24 basis points this morning, which is a good sign. Rates have been rough this month, but movements like this show how quickly things can change day to day.
Seller concessions can be a big help if you’re buying right now. Higher mortgage rates affect both buyers and sellers, and that shift can give you more leverage. I’m not just talking about price reductions — I’m talking about seller credits or concessions, especially those that help buy down your interest rate. What you can ask for depends on your loan type, down payment, and occupancy. Here’s something to think about: compare a $20,000 price reduction to using that same amount to lower your rate. You might be surprised at how much you can save over time with a rate buydown. That’s why it’s important to have a plan before you make an offer. I’m always happy to run the numbers with you. If you’re selling, a seller-paid rate buydown can be a stronger draw for buyers than a straight price reduction. It’s worth discussing with your real estate broker or reaching out to me directly.
If you have questions about your specific situation — whether you’re buying, refinancing, exploring a retirement mortgage, or just want to talk through your options — I’d love to hear from you.