One of the questions I hear all the time from buyers and sellers is:
"If the Federal Reserve raises or lowers interest rates, does that mean mortgage rates automatically go up or down?"
The short answer is no.
This is one of those things that can be confusing because we hear the words "interest rates" used as though they all refer to the same thing. They don't.
The Federal Reserve controls the federal funds rate, which is the rate banks charge one another for overnight borrowing. That's a very different type of interest rate than the rate you receive on a 30-year fixed mortgage.
So what actually determines mortgage rates?
Long-term mortgage rates are much more closely connected to what's happening in the bond market, particularly the 10-year U.S. Treasury and the market for mortgage-backed securities.
Think of it this way:
The Fed controls a short-term rate.
The bond market helps determine long-term borrowing costs.
A 30-year mortgage is a long-term loan, so investors and lenders are looking at what they believe will happen with inflation, economic growth, government borrowing, future interest rates and other factors over many years — not simply what the Fed announces at its next meeting.
In fact, Fannie Mae explains that the 30-year mortgage rate is primarily benchmarked to the 10-year Treasury, with additional spreads reflecting the risk and costs associated with mortgage-backed securities and originating mortgages.
This is why things can get confusing
The Fed could cut its federal funds rate and mortgage rates could actually rise.
That sounds backwards, but it has happened.
For example, after the Federal Reserve cut its federal funds rate in September 2024, the average 30-year mortgage rate subsequently increased rather than falling. Fannie Mae noted that changing expectations around inflation, economic growth and other economic developments pushed the 10-year Treasury yield higher, which in turn put upward pressure on mortgage rates.
The same thing can happen in reverse.
The Fed could raise its short-term rate while longer-term bond yields don't move much — or even move lower — depending on what investors believe is going to happen with the economy and inflation.
What does this mean if you're buying or selling a home?
This is actually good information to understand because you don't necessarily want to sit on the sidelines waiting for "the Fed to lower rates."
Mortgage rates can move before the Federal Reserve makes a decision because the bond market is constantly reacting to new economic information and changing expectations.
And when the Fed actually makes an announcement, the mortgage market may have already priced in much of what investors expected to happen.
That's why you'll sometimes hear:
"The Fed cut rates, so why didn't mortgage rates fall?"
Or:
"The Fed hasn't cut rates, but mortgage rates just went down."
Both can happen.
As of September 17, 2026, Freddie Mac's national weekly average for a 30-year fixed mortgage was 6.95%. That rate is a snapshot of the mortgage market and is not the same thing as the federal funds rate.
The bottom line
I always tell my clients that real estate decisions should be based on your individual situation, not on trying to perfectly time the next Federal Reserve announcement.
Mortgage rates are influenced by a much bigger picture — including the bond market, inflation, economic growth, expectations about future interest rates and investor demand for mortgage-backed securities.
And there is another important piece to remember:
You are not marrying your mortgage rate.
If you buy a home that is right for you today, your circumstances may change in the future — and if mortgage rates eventually move lower, refinancing may become an option.
On the other hand, if you're selling, waiting for the "perfect" rate can mean waiting for a market condition that may never arrive exactly when you want it.
Real estate is personal. The right decision depends on your finances, your goals, your timeline and the property itself.
Don't let a headline about the Federal Reserve make the decision for you. Understand what is actually happening in the mortgage market, and then make the decision that makes sense for your situation.
