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Whenever the Federal Reserve announces an interest-rate increase, I hear concerns from people who are thinking about buying a home.
“The Fed raised rates. Does that mean mortgage rates just went up too?”
The simple answer is:
Not necessarily.
This is one of the most misunderstood parts of the homebuying process, so let’s break it down without all the financial jargon.
The Fed Doesn’t Set Your Mortgage Rate
On September 16, 2026, the Federal Reserve raised its target for the federal funds rate by ¼ of a percentage point, to a range of 3.75%–4.00%.
But here’s the important part for homebuyers:
The Federal Reserve does not directly set the interest rate on a 30-year fixed mortgage.
The federal funds rate is a short-term interest rate in the banking system.
Mortgage rates work differently.
So What DOES Affect Mortgage Rates?
Mortgage rates are influenced by the larger financial markets.
You may have heard people say mortgage rates follow Treasury bills. That’s close, but when we’re talking about a traditional 30-year fixed mortgage, longer-term Treasury yields—particularly the 10-year Treasury—are more relevant than short-term Treasury bills. Mortgage-backed securities are also an important part of the picture.
You don’t need to understand all of that to buy a house.
The important thing to remember is:
Fed rate and mortgage rate are not the same thing.
If the Fed Raises Rates ¼%, Does My Mortgage Rate Go Up ¼%?
No.
There isn’t a one-for-one relationship.
If the Fed raises its rate by ¼%, mortgage lenders don’t simply add ¼% to their mortgage rates.
Mortgage rates could rise. They could fall. Or they might not change very much.
That’s because financial markets are constantly looking ahead and reacting to things such as inflation, the economy and what investors believe may happen in the future.
Sometimes the market has already anticipated what the Federal Reserve is going to do before the announcement is even made.
What Are Mortgage Rates Doing Right Now?
According to Freddie Mac’s national mortgage survey, the average 30-year fixed mortgage rate was 6.95% as of September 17, 2026. The previous week’s average was 6.76%.
But remember: that’s a national average, not necessarily the rate you will receive.
Your actual mortgage rate can depend on factors such as your credit, loan program, down payment and current market conditions.
That’s why I encourage buyers to talk with a knowledgeable lender rather than relying on a mortgage-rate headline they saw online.
Don’t Let a Headline Stop Your Home Search
This may be the most important part.
When buyers hear:
“The Fed raised interest rates!”
some immediately assume they can no longer afford to buy a home.
Before making that decision, get the actual numbers.
Ask a lender:
What interest rate could I qualify for today, and what would my monthly payment actually be?
You may decide the payment isn’t comfortable for you—and that’s useful information.
But you may also discover that buying is still very much within reach.
Look at the Whole Picture
Interest rates matter, but they’re only one part of a home purchase.
The price of the home, your down payment, loan program, taxes, insurance and other expenses all contribute to your monthly payment.
And market conditions matter too. A market in which buyers have more choices can sometimes create opportunities to negotiate that weren’t available when buyers were competing heavily for every house.
That’s why I don’t believe buyers should make a major decision based on one headline.
Get the facts. Look at the numbers. Then decide what’s right for you.
If you’re thinking about buying a home in Smithville, DeKalb County, Center Hill Lake or the surrounding Middle Tennessee area, I’m happy to help you understand the real estate side of the equation and connect you with a trusted lender who can explain the financing side.
No pressure—just good information so you can make an informed decision.
Betsy Smith, REALTOR®
Better Homes & Gardens Real Estate Town & Lake
615-828-8396
