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Myth vs. Reality: Does the Fed Control Mortgage Rates?

Myth vs. Reality: Does the Fed Control Mortgage Rates?

by | Oct 7, 2026

Myth vs. Reality: Does the Fed Control Mortgage Rates? Simplifying The Market

You’ve probably heard the Federal Reserve (the Fed) is raising rates again. And if you’re planning to buy or sell a house, you may be wondering what that means for you.

With all the headlines, it’s easy to think the Fed sets mortgage rates. That’s actually a common myth. But the Fed’s decisions can still have an impact on them.

So, where does that leave you? The next few months could get a little bumpy. But the Fed is playing the long game. And with the right plan, you can still make a move that works. Let’s break it down.

Why the Fed Is Raising Rates

It all comes back to inflation. With prices rising fast, everything is getting more expensive – and that leaves buyers with less spending power and makes homes cost more to build.

So, the Fed raises its key short-term rate (the Federal Funds Rate) to slow down inflation. And that’s where a lot of people get tripped up.

  • MYTH: The Fed controls mortgage rates.

  • REALITY: The Fed has an impact on mortgage rates, but it’s only one piece of the puzzle.

As NerdWallet explains:

“The Federal Reserve influences mortgage rates, but doesn’t set them. . . Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve’s monetary policy is a factor, too . . .”

Here’s the simplest way to explain how it all fits together. Mortgage rates tend to follow something called the 10-year treasury yield. That’s the return investors get for lending money to the government for 10 years. And that yield moves up and down based on what investors expect from inflation and the economy.

Right now, one of the biggest things moving that yield is the conflict in Iran. It’s pushed oil prices higher, which has investors worried about inflation. That’s why any news about the conflict can move mortgage rates. If there’s resolution in Iran, that could take some pressure off inflation and mortgage rates. But the timing is hard to predict.

What the Fed does can move that yield, too. When they hike the Federal Funds Rate to fight inflation, investors pay attention. That can push the 10-year yield up, and mortgage rates usually follow. But once inflation cools, the yield has room to come back down, and mortgage rates can, too. That gives buyers some of their purchasing power back (see graphic below):

a diagram of a federal funds rate

Think of it as a little pain today to set up some relief down the road. But how long could that short-term pain last? A lot depends on what the Fed does next.

There’s a Strong Possibility the Fed Will Hike Again This Year

According to CME FedWatch, there’s over an 80% chance the Fed hikes their federal funds rate at least once more before the end of 2026 (see graph below):

a graph of hikers with blue squares

Remember, the Fed doesn’t set mortgage rates. But another hike will likely keep upward pressure on them in the short term. So, should you wait it out? Sam Williamson, Senior Economist at First American, says this:

“Over time, firmer Fed action could help steady the bond market and open the door to lower mortgage rates, but only if investors become more confident that inflation is coming under control.“

And there are some early signs that’s starting to happen. Inflation cooled faster than experts expected in August:

  • PCE inflation dropped to 3.4%, down from 3.7% in July.

  • Core PCE (the Fed’s preferred measure which leaves out food and energy prices) fell to 3%, down from 3.3%.

That’s a step in the right direction, and it’s part of why the odds of a hike at the Fed’s October meeting have come down recently. But inflation’s still above the Fed’s 2% target, and it’s been that way for about 5 years. So, lower rates could still take a while. Your best bet is a plan that works at today’s rates.

How To Make Your Move Work Right Now

While this rate hike cycle isn’t the headline you want to see, it doesn’t mean you have to wait. There are still ways to move, even now.

  • If you’re buying: Get pre-approved so you know your real budget. Ask your lender about your options to get the best rate possible. And once you’re under contract, lock your rate so a jump before closing doesn’t raise your payment.

  • If you’re selling: Decide what matters most to you – a quick sale or top dollar. Each one can call for a different plan. Price for today’s buyers, whose budgets are smaller with higher rates. And think about offering a rate buydown or other concession. They can do more for a buyer’s budget than a price cut.

Bottom Line

The Fed doesn’t set mortgage rates, but its hikes can keep them higher for a while. The goal is to bring inflation, and eventually rates, down over time. With more hikes likely this year, waiting may not pay off. So, connect with a local real estate agent to map out a plan that works at today’s rates.

Here’s Why Mortgage Rates Are What They Are Right Now

Here’s Why Mortgage Rates Are What They Are Right Now

by | Aug 12, 2026

Here’s Why Mortgage Rates Are What They Are Right Now Simplifying The Market

If you’re waiting for mortgage rates to fall a lot before you buy, you may be waiting a while. But before you get discouraged, there’s a number working behind the scenes that’s actually good for you right now. It’s called the spread, and once you understand it, you may see today’s rates in a whole new light.

The Pattern That’s Held for 50+ Years

For starters, mortgage rates don’t move on their own. They tend to follow the 10-year treasury yield, a number tied to how investors feel about the economy.

It’s not an exact science, since plenty of other factors can move it day to day, but broadly speaking, when the economy looks strong, that yield tends to climb over time. When the outlook gets shaky, it tends to ease. For over 50 years, the 10-year treasury yield and mortgage rates have moved almost in lockstep (see graph below):

a graph of a graph showing the number of mortgage rates

The gap between them is called the “spread.” On average, that gap runs about 1.76 percentage points. And that spread impacts your mortgage rate. A wider spread tends to push mortgage rates higher than the treasury yield alone would suggest, while a narrower spread keeps rates closer to the treasury yield.

One of the Big Reasons Rates Likely Won’t Drop Dramatically Anytime Soon

If you’re hoping mortgage rates will drop a lot, here’s the reality – they probably won’t, at least not anytime soon. One of the big reasons why comes down to that spread between the 10-year treasury yield and mortgage rates.

A few years ago, that gap got a lot wider as uncertainty in the economy pushed it as high as 3.19 points in 2023.

Now here’s the part worth noting – that gap has been narrowing lately. It’s down to about 2.01, just above the long-term average of 1.76 (see graph below):

a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of a graph of

When the gap is wide, there’s more room for rates to fall. But when it’s relatively normal, like it is now, there’s less wiggle room for rates to fall.

Why Mortgage Rates Aren’t Higher Right Now

Today’s mortgage rate is basically the treasury yield plus the spread. So, when either one moves, your rate moves with it. Here are 3 different rates, all built off today’s 10-year treasury yield of 4.68% to show you just how much the spread matters for your bottom line (see graph below):

a graph of a graph showing a rate of interest

If the spread were still stretched out like it was in 2023, rates would be pushing close to 8% right now. That’s because the spread was over a full point wider than it is today.

But now, thanks to the spread narrowing recently, today’s rate sits around 6.69%. That’s the middle scenario in that visual. That’s a big difference in your monthly payment compared what we could see if the spread was as big as it was 2023. As Logan Mohtashami, Lead Analyst at HousingWire, put it:

“Of course, mortgage spreads being better in 2026 is the housing hero story of the year . . .”

Now compare that middle bar to the 3rd one. If the spread were sitting at its exact long-term average, rates would be around 6.5%. That’s only about a quarter of a point away from where rates actually are today. That means most of the improvement in mortgage rates we should realistically expect from a shrinking spread has already happened.

In other words, the same narrowing spread that’s the reason rates aren’t close to 8% today is also a big reason why they’re not likely to fall a lot further.

Bottom Line

That’s the trade-off with a narrowing spread. Rates may not be where you want them, but they’re better than they could’ve been. If you want help figuring out what that means for your monthly payment, reach out to a local lender

Thinking About Waiting for Lower Mortgage Rates? Read This First.

Thinking About Waiting for Lower Mortgage Rates? Read This First.

by | Aug 6, 2026

Thinking About Waiting for Lower Mortgage Rates? Read This First. Simplifying The Market

Imagine waiting a year to buy a home, only to find mortgage rates haven’t changed much. That may sound frustrating.But it’s a real possibility.

A lot of people are putting their plans on hold because they believe much lower mortgage rates are right around the corner. But, based on today’s forecasts, that may not happen. And you should know that before you decide what to do.

Let’s look at why experts don’t expect a dramatic drop in rates – and the options that could help you buy anyway. Because even if rates don’t fall, you can still move. Here’s how.

1. Mortgage Rates Aren’t Expected To Fall in a Meaningful Way

If you’re waiting for rates to fall, you’re not alone. A recent survey from Clever-Best Interest found 42% of people believe mortgage rates will drop below 5% this year.

The challenge is, that’s not what the experts who study mortgage rates every day are expecting.

Forecasts from Fannie Mae, the Mortgage Bankers Association, and Wells Fargo all show mortgage rates staying relatively steady in the low-to-mid 6% range through at least mid-2027 (see graph below):

a graph with numbers and lines

Why? Rates are influenced by inflation, the overall economy, Treasury yields, Federal Reserve policy, global events, and a lot of other moving pieces. And right now, those factors simply aren’t pointing toward the kind of dramatic rate drop many buyers are waiting for.

Could rates move a little? Of course. But if you’re holding out for a bigger drop, today’s forecasts suggest you may be waiting a lot longer than you expect.

2. Inflation Is Still Elevated – And That’s Working Against Lower Rates 

One reason experts aren’t expecting rates to fall much? Inflation. Generally speaking, high inflation is the enemy of lower mortgage rates.

And after a period of relative stability from mid 2023 to late 2025, recent data shows inflation has actually been trending higher lately (see graph below):

a graph of a number of people 

In other words, one of the biggest ingredients needed for much lower mortgage rates simply isn’t in place today. That helps explain why experts aren’t forecasting the kind of meaningful decline so many buyers are hoping for.

3. Today’s Rates Aren’t High, They’re “Normal”

And this may be the biggest mindset shift of all. The reality is, while today’s rates may feel high compared to a few years ago, they’re not high. They’re normal.

Historically, mortgage rates have spent the majority of their time somewhere between about 5% and 10%. And data from Freddie Mac shows we’re actually well in that range today. It just feels high because we all remember the ultra-low rates homeowners got during the pandemic (see graph below):

a graph of a graph showing the rise of a mortgage rate 

Now, this doesn’t suddenly make a 6% mortgage feel exciting. But it does remind us that waiting for super low rates again may not be a realistic strategy.

So… What Should You Do Instead?

None of this is meant to convince you that you have to buy today. You don’t. But if you need to because something in your life’s changed, there are still ways to find better affordability without waiting for mortgage rates to fall.

  • Check out newly built homes. Many builders are offering incentives to attract buyers, including price cuts, potentially lower rates, free upgrades, and more.

  • Ask about an adjustable-rate mortgage (ARM). If you don’t plan to stay in the home long-term, an ARM may offer a lower initial interest rate than a traditional 30-year fixed mortgage. It’s not the right choice for everyone, but it’s worth asking a lender if it fits your plans.

  • Look into mortgage rate buydowns. This is when you pay upfront to reduce your mortgage rate so you can get for a lower monthly payment without waiting for rates to fall.

  • Find out about assumable mortgages. An assumable mortgage allows you to take over the seller’s existing loan, including its lower mortgage rate.

The important thing is you shouldn’t assume waiting is your only option.

Talk with your real estate agent and lender about whether one of these strategies could be a good fit for you.

Bottom Line

If you’ve been putting your home search on hold because you’re convinced mortgage rates will be much lower soon, it may be worth taking another look at that strategy.

Connect with an agent or lender so you have an expert who can at least walk you through your options and decide whether waiting really puts you in a better position – or just keeps you on the sidelines a little longer.

What Buying or Selling a Home Gives Back to Your Community

What Buying or Selling a Home Gives Back to Your Community

by | Jul 6, 2026

What Buying or Selling a Home Gives Back to Your Community Simplifying The Market

Buying or selling a home is a big financial decision. And right now, it feels even bigger. Inflation is high, costs are high, and you want to be sure the timing is right before you make your move. 

But if you do decide to go for it, whether you’re buying or selling, here’s something reassuring to hold onto. Not only does your move change your own life, but it also gives your whole community a boost.

Real estate is a huge part of the economy. In 2025, it added up to about $5.6 trillion, according to the National Association of Realtors (NAR). A good share of that comes from everyday people buying and selling homes, just like you.

Your Move Puts Real Money Into the Local Economy

Every sale sends money flowing through your area. NAR data shows that buying an existing home (one that’s already been lived in) adds about $64,000 to the local economy. Buy a newly built home, and that number climbs to more than $134,000 (see graph below):

a diagram of a home sale

Over half of that comes from the work of building the home itself. The rest flows to real estate services, like agent and lender fees, plus what you spend settling in afterward, on things like furniture and remodeling.

And the money doesn’t stop there. As local businesses earn it, they spend it again in your area, so a single sale ripples further than the sale price alone.

One Sale Keeps a Lot of People Working

Behind every sale is a whole network of people doing their jobs. Contractors, lenders, inspectors, movers, and more. When you buy or sell, you help keep them busy. Lawrence Yun, Chief Economist at NAR, puts it this way:

“Increased home sales mean more economic activity — lawn care, furniture purchases, moving services, mortgage originations and other related business activities all get a boost.“

So, your move supports your neighbors’ livelihoods, too. The deal that gets you into your next home also helps a local crew make payroll. In a year when every paycheck counts, that’s no small thing.

Your Local Impact May Be Even Bigger

What your move financially adds to your community depends a lot on where you live. To help you see how it can vary, here’s a look at the impact of a typical newly built home sale by state.

The national average for a newly built home is about $134,000, but some states see far more (see map below):

a map of the united states

In California, a single sale adds more than $300,000 to the local economy. In Hawaii, it’s over $350,000. Even in the most affordable states, the number lands in the tens of thousands.

Want to know what a move would mean where you live? A local agent can show you the figure close to home.

Bottom Line

Moving is both a personal milestone and an investment in your community. So, if the time is right for you, connect with a local agent. You’ll make a difference for more people than you know.

More Sellers Are Taking Their Homes off the Market. Here’s What You Need To Know.

More Sellers Are Taking Their Homes off the Market. Here’s What You Need To Know.

by | Jun 24, 2026

More Sellers Are Taking Their Homes off the Market. Here’s What You Need To Know. Simplifying The Market

You may be hearing that a near-record number of homeowners are pulling their houses off the market. And if that headline has you thinking, “Wait… is something bad about to happen?” You’re not alone.

Because when people start stepping to the sidelines, it sounds like a warning sign that something’s coming – or that they realize something you don’t know.

Here’s the thing. This trend gets spun like it means the market is about to crash. But the data tells a more practical story.

What the Numbers Actually Say

According to the latest data from Redfin, 5.5% of all listings were taken off the market in May. And it’s true that’s almost the highest it’s been since back in March 2020 (see graph below): 

a graph showing the price of a home

That can sound scary. But a lot of the fear comes from how this story gets told. “A near record number of sellers are pulling their listings” makes a great clickbait headline – and that sort of thing spreads fast, especially online. But sellers pull a house off the market for plenty of reasons that have nothing to do with a crash.

Redfin points to four main forces driving this trend:

  • Homes are taking longer to sell. When the pace slows down, some sellers get frustrated and decide to hold off.

  • The number of homes for sale is rising faster than demand. That means buyers have more options. And sellers who don’t price or prep right may not get many eyes on their house.

  • Some sellers still have pandemic-era price expectations. A price that would’ve worked a couple years ago may not match what today’s buyers will pay.

  • Economic uncertainty is making both buyers and sellers cautious. Buyers pause. Sellers second-guess. And that has an impact on overall sales volume and pace.

Notice what’s missing from that list? There isn’t a single mention of an impending market crash or price collapse.

This is about a shifting pace, more competition, and sellers deciding how they want to respond.

One Detail Most Headlines Leave Out

Want more peace of mind that this isn’t a crash? This next stat delivers. Yes, more sellers are taking their homes off the market. But Redfin also shows something you’re not going to see in social posts…

The number of re-listings is growing too.  

While more sellers are pulling their listings, more are also deciding to give selling a second shot too. This is pretty much the highest re-listings have been since the pandemic hit.

While 5.5% got pulled in May, 2.3% were also put back on the market (see graph below):

a graph of sales and prices

That’s a signal sellers aren’t giving up or running away in large numbers.

Some are simply stepping away briefly before deciding to try again. That tells you this often isn’t a permanent decision. In many cases, it’s a pause – and the seller comes back with a different approach.

A lot of the time that change in the overall strategy is all that’s needed to finally get a house sold. 

And just in case you need more proof this isn’t a reason to worry, check this out. Buyer activity may be starting to pick back up – and that could bring more sellers back in or, at least, prevent some sellers from pulling back. 

The National Association of Realtors (NAR) reports existing home sales increased 3.2% in May. That’s the biggest increase since December. As the Wall Street Journal puts it: 

“Home sales in May posted the biggest rise this year, a sign that the housing market’s crucial spring selling season may be showing signs of life after a sluggish start.”

That doesn’t sound like a market in trouble.

Bottom Line

If you’re seeing headlines about how a record number of sellers are taking their homes off the market, don’t panic. It’s not a warning of an impending crash. It’s a market adjusting.

What Rising Inflation Means for Your Move

What Rising Inflation Means for Your Move

by | Jun 4, 2026

What Rising Inflation Means for Your Move Simplifying The Market

Data shows inflation is moving in the wrong direction. But before the headlines send anyone into a panic, here’s what’s actually going on, why it matters for the housing market, and what it means if you’re thinking about buying or selling.

Inflation Went Up – Here’s What That Actually Means

The government tracks inflation in a variety of ways. One is something called PCE – the Personal Consumption Expenditures Price Index. It measures how much more (or less) people are paying for goods and services compared to a year ago. And just based on your own expenses, you can probably guess which way that’s trending.

That’s the one everyone is talking about right now. Check out the yellow line to see how that’s spiked since February (see graph below). A big driver of this jump is the ongoing conflict in the Middle East, which has pushed gas and energy prices significantly higher.

a graph with blue and yellow lines

Now, you may have noticed there’s a second line. The blue line shows core PCE. That’s the same measure, but with gas and energy prices stripped out. The Federal Reserve (the Fed) actually watches this number most closely because energy prices swing around a lot and can be misleading.

And here’s the somewhat encouraging part.

Core PCE is rising, but not nearly as fast as the overall number. That suggests a good chunk of the inflation spike we’re seeing right now is tied directly to what’s happening overseas. So, when that situation settles down, inflation may settle a bit, too.

Why This Matters for Mortgage Rates

Here’s the housing connection. When inflation is high, the Fed tends to keep the Federal Funds Rate elevated or even raise it to try to taper spending and cool inflation back down. And while it’s not a one-for-one relationship, that Federal Funds Rate can have an impact on your mortgage rate when you buy. 

Right now, based on the information we have, there’s roughly a 50/50 chance the Fed actually raises the Federal Funds Rate before the end of 2026, according to CME FedWatch (see graph below):

a graph of blue squares

While it’s too soon to say where this goes for certain and if we’re headed for a rate hike, it does mean mortgage rates are probably not coming down as soon as most people were hoping.

If you’ve been waiting for rates to drop significantly before making a move, this report is a reminder that “higher for longer” is still very much on the table. It really all depends on where the economy goes from here. According to Bankrate:

“Oil prices and bond yields have dropped a bit . . . but they’re still way up compared to the start of spring. Until there’s a resolution to the war, look for both inflation and mortgage rates to stay high.”

But This Is Not 2008 – Not Even Close

Just remember, a tough economy does not equal a housing crash. The conditions today are very different from what led to the 2008 collapse. Here’s why:

  • Inventory is still relatively low. There’s no flood of homes hitting the market.

  • Most homeowners today have strong equity in their homes.

  • Lending standards are far stricter than they were before 2008.

  • Today’s challenge is affordability, not a wave of distressed underwater sellers.

Uncomfortable and unhealthy are not the same thing. The market feels hard right now, but “hard” and “crashing” are very different.

You Still Have Options. Here’s What To Do.

High rates don’t mean homeownership is out of reach. It just means the path looks a little different. There are real strategies that can help, depending on your situation:

  • Ask your lender about different loan options. Adjustable-rate mortgages (ARMs) or rate buydowns may help lower your monthly payment in the short term.

  • Explore first-time buyer programs, down payment assistance, or seller concessions that could help offset costs.

  • Stay in close touch with a trusted agent and lender. When rates shift, and they will, you’ll want to be ready to move fast.

The right strategy, tailored to your goals, matters a lot more than waiting for the perfect moment that may never come.

Bottom Line

Inflation is still above where the Fed wants it, and that means mortgage rates are likely to stay elevated for a while. But for people who need to move, strategy matters far more than trying to perfectly time the market.

Wondering what this means for your specific situation? Connect with a local agent or lender.

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