Yesterday afternoon, the Federal Reserve announced a 25-basis-point increase to the federal funds rate. That didn't move mortgage rates much, mainly because rates had already jumped in anticipation of the rate hike.
The average interest rate on a 30-year, fixed-rate mortgage rose to 7.05% APR, according to rates provided to NerdWallet by Zillow. This is three basis points higher than yesterday and seven basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.
There's a chance that the Fed's hike could relieve some of the upward pressure on mortgage rates. The central bankers' previous failures to act on inflation were one force pushing longer-term bond yields higher. (Mortgage rates are often benchmarked to the 10-year Treasury note, so they go where bond yields go.) Finally seeing the Fed make a move could quell that "Why aren't they doing anything?"anxiety.
Unfortunately though, both bond yields and mortgage rates have been moving up for some time, and the Fed's not the only influence on their future direction. Additionally, while it's good news that the Fed's finally stepping up on inflation, the less-good news is that the bankers also appear to be acknowledging that this is a problem that's not going to go away easily.
For more on that, keep reading below the chart.
Average mortgage rates, last 30 days
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🤓 Kate on Rates: September 10, 2026
📈 What influences mortgage rates?
Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news ... you name it. For example, even tiny changes in the bond market can shift mortgage pricing.
The Federal Reserve raising the target for the federal funds rate 25 basis points wasn't yesterday's biggest news. By the time the meeting was imminent, market odds were over 92% in favor of a hike. Mortgage rates had already moved sharply upward on last week's inflation data, numbers which also convinced markets that the Fed would have to hike.
A little bit of a side note, but for someone who has such conviction that the Fed's decisions shouldn't hang on any particular bits of data, chair Kevin Warsh's opening remarks at the post-announcement press conference sure made it sound like that data was important.
"This summer's inflation readings do not tell me that underlying trends have meaningfully improved," Warsh said. "Based on the most recent CPI and PPI data, the 12-month change in total PCE prices likely was around 3.6% in August. Core PCE and CPI prices are running at about 3.2, and 2.4% respectively."
But anyway.
The bigger news out of the September meeting wasn't the rate hike that basically everyone expected, it was the potential for additional rate hikes on the way. The Fed released an updated Summary of Economic Projections, where the committee members all shared their anonymized predictions for major metrics. (Except for Warsh, who refuses to participate.)
One of the most closely watched is the "dot plot," where each dot represents an estimate of the appropriate level for the federal funds rate — the overnight borrowing rate that the Fed adjusts — at the end of each year. Looking at the previous round of projections for 2026 versus the ones released yesterday shows a pretty stark difference, and not just because they had to cram most of the dots into one row in September.
Federal Reserve Dot Plot: June vs. September
Each dot represents an individual estimate for where the federal funds rate should be at the end of 2026.
June predictions
September predictions
The yellow shading indicates the current level.
Source: Federal Reserve Summary of Economic Projections
The majority of meeting participants think that, by the end of 2026, the target for the funds rate should be 25 basis points higher than it is now — one more little hike. But there's also a decent contingent who think it should go 50 basis points higher, which could be spread out between the October and December meetings, or be one sizable hike, probably in December. (Even though the Federal Reserve is politically independent, there's a lot of chatter that a rate hike right before the midterm elections could be perceived as a political move.)
Parsing Warsh's words at the press conference also has folks thinking this isn't a one-and-done rate hike. (I should also note that this is pretty much exactly what Warsh doesn't want markets doing. Oh well.) One phrase was quickly singled out: "dose of accommodation."
This first came up fairly early in his prepared remarks. "I would be hard-pressed to describe broad financial conditions as restrictive," Warsh said. "This view was widely shared by the committee. So, we removed a dose of accommodation." He went on to reference the "dose of accommodation" twice more while taking reporters' questions.
Between the implication of "dose" seeming like it wouldn't happen just once, Warsh otherwise sounding like he believes the economy is strong and of course, the dot plot, markets are now anticipating one or more additional rate hikes by the end of the year. According to the CME Group's FedWatch tool, the odds of another 25-basis-point hike in October are roughly 50%, and the odds of a follow-up in December are nearly 40%. A week ago, those numbers were about 27% and 18%, respectively.
Like I said above, the Fed getting serious about fighting inflation could help relieve some of the bond market's stress that inflation will simply grow unchecked. But in order for the Federal Reserve to try to tame inflation, they've got to raise the funds rate. Changes to the federal funds rate ripple out to every corner of the economy, and we're now potentially looking at a higher for longer rate environment.
While the Fed's actions, and markets' reactions to them, could take some of the upward pressure off of mortgage rates, don't expect mortgage rates to drop.
» Learn more: How the Fed affects mortgage rates
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🔁 Should I refinance?
Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).
With rates where they are right now, you could start considering a refi if your current rate is around 7.55% or higher.
Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.
If you're looking for a lower rate, use NerdWallet's refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.
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🏡 Should I start shopping for a home?
There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.
If the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.
NerdWallet’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.
» Is now a good time to buy? See NerdWallet’s analysis
🔒 Should I lock my rate?
If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you take advantage of a better rate if the market drops during your lock period.
Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.
🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the deal you have, it’s okay to commit.
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🧐 Why is the rate I saw online different from the quote I got?
The rate you see advertised is a sample rate — usually for a borrower with perfect credit, making a big down payment, and paying for mortgage points. That won't match every buyer's circumstances.
In addition to market factors outside of your control, your customized quote depends on your:
- Credit score
- Debt-to-income ratio
- Employment history
- Down payment
- Type of mortgage
- Location and property type
- Loan amount
Even two people with similar credit scores might get different rates, depending on their overall financial profiles.
» Get the best rate for you: How to get the best mortgage rate
👀 If I apply now, can I get the rate I saw today?
Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.
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