The Fed Just Raised Rates. Here's What That Actually Means for Your Mortgage.
On September 18, the Federal Reserve raised interest rates by a quarter point, its first increase since 2023.
If your first thought was "well, there goes my mortgage rate," I want to slow that down a bit. The relationship between the Fed and your mortgage is not what most people think.
The Fed Doesn't Set Mortgage Rates
The Fed controls short-term rates. Your mortgage follows long-term rates, specifically the 10-year Treasury yield. Those two move for different reasons, and sometimes in different directions.
I listened to Dr. Marci Rossell, chief economist for Leading Real Estate Companies of the World, break this down last week. Her point: long-term rates have been climbing for about six months, with 10-year and 30-year Treasury yields now above 5%, levels we haven't seen since before the financial crisis. Those yields are being pushed by stubborn inflation and the federal deficit, not by last week's Fed decision.
So the Fed's move confirms a trend that was already in motion. It didn't cause it. And markets are watching for the possibility of another increase in December.
Three Other Things Worth Knowing
Affordability is about more than the mortgage payment. Inflation is well off its pandemic peak but still elevated, with energy costs feeding into transportation, goods, and everyday expenses. When groceries and gas take a bigger bite, that changes what a buyer can comfortably carry, regardless of what the rate sheet says.
Housing absorbs more of the rate impact than almost any other sector. Dr. Rossell pointed out that housing has taken the brunt of this environment. And yet activity continues, because people still get married, have kids, take new jobs, and downsize. Life doesn't wait for rates.
Here's the one nobody's talking about locally: the AI buildout is competing with housing for money, workers, and materials. Data center construction is pulling in capital and labor that would otherwise go toward building homes. In a region that already doesn't build enough housing, that's a real headwind, and it's not something you'll hear about at an open house.
What This Means Around Here
None of this changes the fundamentals in southeastern Massachusetts. Norfolk County still has under two months of supply. Plymouth County prices were up 6.5% year over year. Homes are still going under contract in about three weeks.
The pattern holds as you move west and south too. From the Bristol County towns like North Attleboro, Norton, and Easton through the South Shore, the story is the same: not enough inventory, steady demand, and buyers who've decided that waiting for a perfect rate is its own kind of expensive.
Higher rates don't stop people from moving. They change the math on how much house makes sense and how you structure the deal. That's a conversation worth having before you start looking, not after.
If you're trying to figure out what these numbers mean for your specific situation, I'm glad to walk through it with you. No pressure, no pitch.
Question for you: if rates stay in this range through 2027, do you wait it out or move forward anyway? I'm curious where people land on this one.
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