Willow and Hearth

The Federal Open Market Committee voted 12 to 0 on September 16, 2026 to raise its target range for the federal funds rate by one quarter of a percentage point, to 3.75 to 4 percent, according to the Federal Reserve statement for that date.

In the same statement the Committee said economic activity is expanding at a solid pace, job gains have kept pace with growth in the workforce and inflation remains elevated. It said the move will support a timelier return to its 2 percent inflation goal.

The Fed’s implementation note for the decision says the new administered rates took effect September 17, 2026. Interest on reserve balances rose to 3.90 percent and the primary credit rate rose by one quarter of a percentage point to 4 percent.

What the Fed controls and what it does not

The federal funds rate is the Fed’s policy target. In its own explainer on how monetary policy works, the Federal Reserve says changes in the federal funds rate are rapidly reflected in the rates banks and other lenders charge on shorter term loans. For longer term loans, it says rates are related to expectations of how monetary policy will evolve, not just to the current level of the federal funds rate.

That description matters to anyone with a mortgage plan. The Fed does not announce a mortgage rate. The link runs through expectations, which the Fed says its communications can help guide.

What mortgage rates did around the decision

Freddie Mac publishes a weekly average for the 30 year fixed mortgage. Its Primary Mortgage Market Survey archive lists 6.76 percent for September 10, the Thursday before the Fed met. It then lists 6.95 percent on September 17, 7.03 percent on September 24, 7.28 percent on October 1 and 7.40 percent on October 8, 2026.

Those numbers sit side by side with the Fed decision. Neither the Federal Reserve nor Freddie Mac says the decision caused the weekly changes, so this article treats them as two separate facts.

Freddie Mac explains in a research note on the survey dated November 3, 2022 that the figure comes from loan applications submitted to its automated underwriting system. The note describes conventional, conforming home purchase loans for borrowers who put 20 percent down and have excellent credit, and says discount points and origination fees are not captured. A rate offered to a specific borrower can differ.

A worked payment example

The assumptions are a $300,000 loan, a 30 year fixed rate, full amortization and a payment of principal and interest only. Property taxes, homeowners insurance, mortgage insurance, points and fees are left out. The figures come from the standard monthly payment formula.

At 6.76 percent, the rate for September 10, the payment is $1,947.79 a month. At 7.40 percent, the rate for October 8, it is $2,077.14. That is $129.35 more each month, or about $1,552 more over twelve months.

The Fed moves in quarter point steps, so the same math helps with a smaller question. Starting from 7.40 percent, a quarter point drop to 7.15 percent lowers the payment to $2,026.22, a saving of $50.92 a month. A quarter point rise to 7.65 percent raises it to $2,128.54, an extra $51.40 a month. On this loan each quarter point is worth about $51 a month. This is arithmetic on stated assumptions and not a forecast of where rates go next.

Over the full 30 years at 7.40 percent, the interest on this loan comes to about $447,770 under the same assumptions.

What a buyer can do with this

The Consumer Financial Protection Bureau says to request multiple Loan Estimates from different lenders so you can compare. Its Loan Estimate page says the form shows the interest rate, principal and interest, the estimated total monthly payment, taxes and insurance, closing costs and whether a rate lock applies. The bureau says the best way to tell whether you have a competitive offer is to compare it with Loan Estimates from other lenders.

In its guide to shopping for a mortgage, the CFPB sets a goal of comparing at least three offers from different lenders and says getting preapprovals within a short time should not have a major effect on your credit score. The Loan Estimate page adds that some lenders lock your rate when they issue the estimate and some do not, and that the top of page 1 shows whether your rate is locked and until when.

Because the PMMS figure leaves out points and fees and assumes a strong borrower profile, line up your own Loan Estimate figures next to it rather than treating it as your quote. Your state’s rules and your own finances decide what applies to you, so a licensed mortgage professional or your state housing agency can answer questions this article cannot.