The Fed Raised Rates Today. Your Mortgage Rate Didn't Get the Memo

The Fed just raised rates for the first time since 2023. It was a quarter point, pushing the federal funds rate up to a range of 3.75% to 4%. If your phone's about to blow up with headlines about it, I get it. But here's the thing almost nobody explains clearly: the Fed funds rate and your mortgage rate are not the same animal, and they don't move in lockstep.

The Fed funds rate is what banks charge each other overnight. It moves credit cards, car loans, and home equity lines. That's short-term borrowing. Mortgage rates are a different story. They track the 10-year Treasury yield and the mortgage-backed securities market, which are driven by investors betting on where inflation and the economy are headed over the next decade, not by what the Fed does this afternoon. Sometimes mortgage rates move the same direction as a Fed decision. Sometimes they barely move at all. Today's headline is not a mortgage rate forecast.

That disconnect is exactly why just waiting for the Fed to fix it isn't a plan. I've watched buyers sit on the sidelines for a year waiting for a Fed move to bail them out, and the market didn't wait for them. Prices didn't wait, and neither did the good inventory. What actually protects you in a moment like this is having an actual mortgage plan, not a headline reaction.

So what does a plan look like right now? Here's a piece most buyers don't know they have: you can negotiate with the seller to buy your rate down. In this market, with more sellers willing to deal than a year ago, we're seeing buyers offer full price. Sometimes even over ask. And ask the seller to put a few percent toward a permanent rate buydown instead of a straight price cut. The seller still nets what they wanted, you walk away with a lower rate for the life of the loan, and your monthly payment drops for as long as you own the house. Done right, that's how you negotiate a rate that's as much as 1.5% below the national average. Not by waiting on the Fed. By negotiating the deal that's actually in front of you.

That's the plan piece that actually moves affordability. A lower rate on the same price does more for your monthly payment than most people expect, and it's a conversation worth having before you're mid-contract, not after.

If today's headline has you wondering what it actually means for your numbers, that's exactly the conversation we should have. Call the office, 352-282-3020. It takes about five minutes to walk through it. Curious if anyone's tried negotiating a buydown into their offer yet; tell me how it went.