# The Fed Moved Rates. Everybody Panic! (Actually, Please Don’t.)

By Ryan Guess (@ryanguess) · Published 2026-09-17

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**By Ryan Guess | Taking the Guesswork out of mortgages since 2005**

The Federal Reserve changed interest rates yesterday.

So naturally, somewhere in America, a homebuyer just yelled:

**“THE FED RAISED RATES! MORTGAGE RATES ARE GOING THROUGH THE ROOF!”**

Meanwhile, every mortgage professional who understands the bond market quietly reached for another Monster Energy.

Here’s the problem: **The Federal Reserve does not directly set mortgage rates.**

Read that again.

Yesterday, September 16, the [Federal Reserve](https://www.federalreserve.gov/newsevents/pressreleases/monetary20260916a.htm) raised its target for the federal funds rate by 0.25 percentage point, bringing the range to 3.75%–4.00%. The Fed cited inflation that remains elevated as part of the reasoning behind its decision.

But that does **not** mean somebody at the Federal Reserve walked over to a giant red mortgage-rate dial and turned 30-year mortgages up 0.25%.

If only it were that simple.

## So What Does the Fed Actually Control?

The federal funds rate is essentially a very short-term interest rate tied to overnight lending between financial institutions.

Changes in that rate can affect things like short-term borrowing costs and eventually ripple through the economy. But your 30-year fixed mortgage is a completely different animal.

A mortgage lender isn't saying:

**Fed Funds Rate + Ryan's Coffee Budget = Today's Mortgage Rate.**

Mortgage rates are primarily driven by what is happening in the **bond market**, particularly mortgage-backed securities, with the **10-year U.S. Treasury yield** serving as one of the best publicly available indicators to watch.

Historically, the relationship is remarkably strong. Freddie Mac [research](https://www.freddiemac.com/fmac-resources/research/pdf/201906-Insight-05.pdf) found that from 1990 through the period it studied in 2019, movements in the 10-year Treasury explained roughly 98% of the weekly variation in average 30-year fixed mortgage rates. That doesn't mean mortgages move perfectly with the 10-year every single day—the spread between the two can and does change—but it demonstrates why mortgage professionals pay so much attention to the bond market.

## Want to Watch Mortgage Rates? Watch These Instead.

If you're trying to figure out where mortgage rates may be headed, I'd spend a lot less time staring at the Fed funds rate and more time watching a handful of things.

**1\. The 10-Year Treasury**

This is probably the easiest one for the average consumer to follow.

When the 10-year Treasury yield moves significantly higher, mortgage rates frequently experience upward pressure. When Treasury yields fall, mortgage rates frequently get some relief.

They aren't identical twins. Think more like brothers who usually show up to the same family functions wearing similar clothes.

**2\. Mortgage-Backed Securities**

This is where mortgage pricing gets much more direct.

Mortgages are packaged into securities that are bought and sold by investors. The prices and yields investors demand on mortgage-backed securities influence the rates lenders can offer borrowers.

This is also why mortgage rates can move during the day even though Jerome Powell hasn't walked anywhere near a microphone.

**3\. Inflation**

If you want one of the biggest enemies of low mortgage rates, meet inflation.

Bond investors are lending money for long periods of time. Inflation erodes the purchasing power of the money they'll eventually receive back, so persistent inflation can cause investors to demand higher yields.

Higher bond yields can translate into higher mortgage rates.

That is one reason inflation reports can sometimes move mortgage pricing more dramatically than the actual Fed announcement.

**4\. Oil and Energy Prices**

Yes, the price of oil can eventually matter to your mortgage.

Oil affects transportation, manufacturing, shipping, airlines, agriculture and countless other parts of the economy. Large increases in energy prices can contribute to broader inflation pressures.

The Federal Reserve itself noted earlier this year that inflation moved higher as energy prices surged amid geopolitical conflict.

So when somebody asks me:

**“Ryan, why are you watching oil? I thought you did mortgages.”**

Exactly.

Welcome to mortgages, where apparently we need to understand housing, bonds, inflation, oil, geopolitics and whatever else the world decides to throw at us before breakfast.

## Here's Where People Get Tricked

Markets don't just react to what happens.

**They react to what they EXPECT to happen.**

If virtually everyone expects the Fed to make a particular move, bond traders may have already priced much of that information into the market days or weeks beforehand.

Then the announcement happens and everyone waits for mortgage rates to immediately move by exactly the same amount.

They don't.

Sometimes mortgage rates can even move in the opposite direction of the Fed's move because investors are paying more attention to the Fed's language, inflation outlook, economic projections and expectations about what comes next.

That's why the headline:

**“FED RAISES RATES 0.25%”**

doesn't translate to:

**“YOUR MORTGAGE RATE JUST WENT UP 0.25%.”**

Those are two different things.

As of September 10, [Freddie Mac's](https://www.freddiemac.com/pmms) national weekly average for a 30-year fixed mortgage was 6.76%, compared with 6.71% the previous week. Meanwhile, Treasury yields have been moving as markets digest inflation, economic conditions, energy prices and expectations for monetary policy. That's the bigger picture borrowers should understand.

## The Mortgage Market Is Basically a Giant Group Chat

Imagine millions of investors sitting in one enormous group text.

Someone posts:

**Inflation came in hotter than expected.**

Bond market: 😬

**Oil jumps.**

Bond market: 😬😬

**Economic growth is stronger than expected.**

Bond market: 🤔

**Inflation falls faster than expected.**

Bond market: 👀

**Fed does exactly what everyone expected.**

Bond market: _Seen 2:01 PM._

That's closer to how mortgage rates actually behave than simply saying, “The Fed raised rates, so mortgages went up.”

## What Should Homebuyers Actually Do?

Stop trying to perfectly time the Federal Reserve.

I've been doing mortgages since 2005, and if somebody truly knew exactly where mortgage rates were going tomorrow, next month and next year, they probably wouldn't be originating mortgages.

They'd be sitting on their private island.

The better strategy is to understand what you can afford **today**, structure the financing correctly, and have a plan for what you'll do if the market changes later.

Rates fall? Maybe there's a refinance opportunity.

Rates rise? You may be pretty happy you bought and locked when you did.

Either way, your decision should be based on your finances, your goals, the property and the bigger picture—not one headline on Fed day.

So the next time someone tells you:

**“The Fed moved rates, so mortgage rates just moved the same amount!”**

Smile.

Nod.

And send them this article.

Because mortgages are complicated enough without adding bad information to the equation.

**Ryan Guess**  
**Senior Loan Officer | NMLS# 70442**  
_Taking the Guesswork out of mortgages since 2005._

_All loans subject to credit review and approval. This is not a commitment to lend._