The Fed meets Tuesday and Wednesday with an 88% chance of a rate hike. Here's what it means for your mortgage rate, without the jargon.
Rates can only do three things: go up, go down, or stay the same. This week, all signs point to up. Let's talk about why, and why that's not the disaster it sounds like.
The Fed meets Tuesday and Wednesday, September 15 and 16. It's Kevin Warsh's second meeting as Chair. His debut in June was tougher than markets wanted: a hard commitment to the 2% inflation target, no forward guidance, and a dot plot that leaned toward hikes.
After Warsh's debut, a soft July jobs report had markets leaning toward "hold and wait" for September. Then:
August CPI landed hot. Core inflation rose 0.3% for the month, above expectations, even as the annual core rate ticked down from 2.5% to 2.4%.
PPI came in even hotter. Producer prices are up 5.4% year over year, and the six month average is running above 5%. That's upstream pressure that shows up in consumer prices next.
Then Iran happened. Oil spiked above $104 a barrel after an Iran-backed drone attack shut down a major Saudi pipeline, and the Red Sea shipping routes got messier. A rate hike doesn't fix an oil supply problem. But the inflation it creates is something the Fed can't ignore either.
Fed funds futures now sit at roughly 88% odds of a quarter point hike Wednesday.
And there's a timing piece nobody's talking about. The next Fed meeting isn't until October 27 and 28, six days before the midterm elections. If the Fed is going to hike, this is the cleaner week to do it before the politics get louder.
The national 30 year fixed average already jumped to fresh one year highs, upper 6s and creeping toward 7%. The bond market priced in most of the hike before the Fed ever sat down.
Here's my honest take, and I say this every time rates spike: God bless the poor souls I closed at 8.375% back in Q4 2023. Wherever we land this week, we are not there. Context matters.
1. How bonds react to the hike itself. A hike can actually be good news for mortgage rates if it tells the market the Fed is serious about inflation. Credibility can move long term rates more than the fed funds number does.
2. Whether Warsh signals one and done or more to come. The press conference tone matters more than the decision.
3. Whether the Fed calls the oil shock what it is. A supply problem, not a demand problem. If they say that plainly, the bond market tends to like that nuance.
Numbers don't have feelings, and neither do Fed decisions, but your closing date does.
Under contract or closing in the next 60 days: this is a "call me before Wednesday" week, not a "wait and see" week. Fed weeks bring reprice risk in both directions.
Further out, or on my Rate Watch List: sit tight. Life is going to life, the market's going to market, and I'm watching so you don't have to.
Once the dust settles, my After the Fed recap will break down what actually happened and what it means for your rate.
You're the boss. I just work here.
Not directly. The Fed sets the overnight rate banks charge each other. Mortgage rates follow the bond market, mainly the 10 year Treasury and mortgage backed securities. Sometimes a hike calms bonds because it shows the Fed is serious about inflation, and mortgage rates ease. Sometimes the opposite. The reaction matters more than the decision.
If you're under contract and closing within 60 days, talk to your lender before the decision. Fed weeks can reprice in both directions, and protecting your closing is usually worth more than gambling on a small improvement.
Rates are at one year highs, not all time highs. The right time to buy is when it's right for your family and you can afford the payment. Waiting for a specific rate number has burned a lot of people over the last four years.
Educational purposes only, not a rate quote, offer, or commitment to lend. Rate figures are national survey averages; your rate depends on your credit, loan type, and situation. Market data as of September 14, 2026.
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