The vote was unanimous. 12 to 0. Wednesday the FOMC raised the federal funds rate 25 basis points, the first increase since 2023, moving the target range to 3.75% to 4.00%. The 30-year fixed pushed into the 7.00% to 7.08% range by the end of the week, the highest level in over a year.<\/p>\n
The question buyers are asking themselves right now is the same one that comes up every time rates make a significant move: should I wait for rates to come back down?<\/p>\n
After 37 years in mortgage lending, I have a clear answer.<\/p>\n
The Fed releases a dot plot after each meeting showing where each committee member expects rates to land. After Wednesday, 12 of 18 members are penciling in at least one more hike before December. Four see two more hikes. Only two see rates holding here. Chair Warsh told the press conference the committee needs “clear evidence inflation is heading back to target” before easing. The next FOMC meeting is October 27-28.<\/p>\n
If you are waiting for rates to improve before you buy, you are not waiting for a reversal. You may be waiting through one or two more increases first.<\/p>\n
You have probably seen this figure floating around. Financing a $300,000 home at 7% costs roughly $387 more per month in principal and interest than it would at 5%. That is real money, and I am not going to pretend otherwise.<\/p>\n
For a buyer with zero margin in their budget, that difference matters. But if you still qualify at today’s rate and the payment fits your actual life, do not let a number on a rate sheet keep you from buying the right house. Rates are not a permanent fixture in your finances. The house is.<\/p>\n
If rates drop a point or two down the road, you refinance. They do not need to fall back to 5% for a refinance to make financial sense. Even a 1% drop pays off over the long term. The right neighborhood and school district are not going to wait for your perfect rate.<\/p>\n
Use the YMT Mortgage Payment Calculator<\/a> to see what 7% costs on your actual purchase price, then run the same scenario at 6% and 5% so you can see what a refinance would save you down the road. Make the decision with real numbers, not what a headline told you to feel.<\/p>\n We had an unusually long stretch of suppressed mortgage rates, and a lot of buyers treat those years as the baseline. They were not the baseline. The Fed was buying massive amounts of mortgage-backed securities to prop up the housing market after the financial crisis and again in 2020. Rates at 3% and 4% were a policy response to extraordinary circumstances, not the natural level of the market.<\/p>\n Rates may fall again. But waiting for them to return to those levels is a bet against what the Fed’s own dot plot shows. And while you wait, a buyer’s market is beginning to form. Inventory is building. Days on market are stretching out. Sellers who were firm on price six months ago are starting to adjust. If you hold off until rates improve, you may find yourself in a competitive market again the moment everyone else makes the same move at the same time.<\/p>\n I want to say something about what I am seeing on the selling side, because I think the advice going around is off the mark.<\/p>\n A friend of mine is selling her house. Newer neighborhood, under 10 years old, good area, strong school district, shows well. Her agent told her she needs to offer seller-paid rate buydowns because buyers are spooked by the 7% headlines.<\/p>\n I gave her a different recommendation.<\/p>\n Rate buydowns reduce the monthly payment. But the monthly payment is not what is knocking most buyers out of deals right now. Down payment requirements and cash to close are. If she wants to genuinely expand her pool of buyers, seller concessions directed at closing costs will do far more than a rate buydown. Help buyers get to the table with money in their pocket, and you have reached people who could not have gotten there otherwise.<\/p>\n There is also a harder conversation her agent was avoiding. Her real competition is not the resale listing two streets over. It is the builders. New construction is packed with incentives right now: permanent rate buydowns, price cuts, free upgrades. Resale sellers who want to stay competitive need to look at what the builder down the road is offering and figure out how to match it.<\/p>\n I covered this in detail last week, and it is worth revisiting. The federal funds rate and your mortgage rate are not the same thing. Mortgage rates are benchmarked off the 10-year Treasury, a traded market that prices in what it expects the Fed to do long before any announcement comes. That post explains the mechanics.<\/a> Rates hit 7% before Wednesday’s vote landed because the market had already run the math.<\/p>\n Knowing this changes how you read every future Fed headline. The announcement is rarely the moment rates move. The move has usually already happened.<\/p>\n If you want to understand what a lender actually looks at when reviewing your file, the about page<\/a> covers my background and the way I approach working with buyers. The case study page<\/a> shows how the YMT tools have worked for real buyers in real scenarios.<\/p>\n Run your numbers with the Pre-Qualification Calculator<\/a>. If the math works at today’s rates, you have a real decision in front of you. If it does not, you will know exactly what needs to change before it will.<\/p>\n","protected":false},"excerpt":{"rendered":" The vote was unanimous. 12 to 0. Wednesday the FOMC raised the federal funds rate 25 basis points, the first increase since 2023, moving the target range to 3.75% to 4.00%. The 30-year fixed pushed into the 7.00% to 7.08% range by the end of the week, the highest level in over a year. The … Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-107","post","type-post","status-publish","format-standard","hentry","category-market-updates-rate-news"],"_links":{"self":[{"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/posts\/107","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/comments?post=107"}],"version-history":[{"count":1,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/posts\/107\/revisions"}],"predecessor-version":[{"id":115,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/posts\/107\/revisions\/115"}],"wp:attachment":[{"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/media?parent=107"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/categories?post=107"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.yourmortgagetoolbox.com\/blog\/wp-json\/wp\/v2\/tags?post=107"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}The Trap of Waiting for Rates That Are Not Coming Back<\/h2>\n
What Agents Are Getting Wrong Right Now<\/h2>\n
How Mortgage Rates Actually Move<\/h2>\n