The Quick Read: As of September 28, 2026, the Fed has raised rates for the first time since 2023, and fixed mortgage rates have climbed five weeks running. That shifts the question from “which loan has the lowest starting number?” to “which loan can I carry if rates keep rising?” Adjustable loans and home equity lines carry the most risk now. A fixed loan you can afford in every scenario is the safer default.
Key Takeaways
- The Fed voted on September 16 to raise its target range by a quarter point, its first hike since July 2023.
- Freddie Mac’s 30-year average rose for five straight weeks through September 24.
- Adjustable-rate mortgages are gaining share because of a lower starting rate. The risk sits in what happens after the fixed period ends.
- Most home equity lines float with an outside rate, so the hike reaches them fastest.
- Applications are far below last year. Pick the structure you can carry if rates rise further, not the one that looks more affordable today.
What changed: the dated facts
Start with the Fed. On September 16, 2026, the FOMC voted 12–0 to raise its target range by a quarter point, to 3¾–4 percent. Kiplinger’s coverage notes it was the first hike since July 2023. The median projection for the funds rate rose to 4.1% for 2026, according to TD Economics. That points to another hike by year-end.
Officials are split on next year. CNBC reported that eight officials pointed to another hike in 2027, six to holding steady and four to cuts. Nobody knows. Anyone who tells you otherwise is guessing.
Now the mortgage market. Freddie Mac’s survey put the 30-year fixed at 7.03% for the week of September 24, up from 6.95% the week before. A year earlier it averaged 6.30%. That is 73 basis points in twelve months. The run started at 6.66% in late August, so the climb since is 37 basis points. Rates were already moving before the Fed met. CNBC noted the 10-year Treasury had been rising since Jackson Hole on August 28.
Different publishers measure differently. The Mortgage Bankers Association’s weekly survey, released September 23, put its 30-year contract rate at 7.12%, the highest since May 2024. Mortgage News Daily’s index read 7.50% on September 28. These are three yardsticks with three methods. Don’t average them, and don’t treat any of them as a quote.
The Treasury side matters most. NPR reported that the 10-year closed on September 25 just below 5.2%, its highest in more than two decades. Fixed mortgage rates follow that yield far more closely than they follow the Fed’s target.
Demand is responding. In the MBA’s survey for the week ending September 18, the composite index fell 1.5%. The refinance index was 62% below a year earlier. The unadjusted purchase index was 11% below a year ago. Five weeks earlier, purchase was only 0.2% below.
Why did ARMs suddenly get popular?
Because the gap got wide. The MBA reported that the ARM share of applications hit 9.8%, up from 8.4% a week earlier. Its chief economist noted 5/1 ARM rates ran more than a point below fixed. CNBC noted the share was barely 3% in the early pandemic years.
A quick definition. A 5/1 ARM holds its rate for five years, then adjusts once a year. The lower start is real. So is the reset.
The data show buyers reaching for the lower starting number. They don’t show how many understand the adjustment terms. That gap is where trouble starts.
What it means for home buyers
If you’re buying with a fixed loan in mind, the hike changes little about your structure. It changes your budget. A full point on a mortgage is a big swing in what a household can carry. Run your budget at today’s market and at a higher number, and see whether it still holds.
If you’re eyeing an ARM, ask a different question. Not “is it cheaper today?” but “can I carry it after the fixed period if the index is higher?” The Fed’s own projections point to a possible further hike. Forecasts from the MBA and Fannie Mae put year-end 30-year rates around 6.8%, per Scotsman Guide. But those sit below the current Freddie Mac print and may predate the latest run-up. I would not build a plan on a forecast that the market has already passed.
If you own equity and are thinking about a home equity line, know the mechanics. Most HELOCs are variable-rate and follow an outside benchmark, Yahoo Finance explained on September 25. So the Fed’s move flows through to them more directly than to a fixed mortgage you already hold. A line that looked cheap in the spring costs more now.
If you are self-employed or an investor, the same rule applies, with one twist. Non-QM loans that qualify on bank statements or property rental income exist because standard income documents don’t fit every borrower. Optimal Blue data cited by HousingWire show investor and DSCR loans reached 35% of non-QM production in August 2026, up from 28% a year earlier. I found no public series on self-employed volume, so I won’t guess at it. The loan options page carries the current guidelines, and eligibility is subject to lender guidelines.
Is waiting the safe move?
Not automatically. Waiting is a bet, and it has a cost either way.
The housing market isn’t offering a bargain for patience. NAR’s housing snapshot shows existing-home sales at a 3.98 million pace, inventory at 1.62 million homes and 4.9 months of supply. The median price was $429,100. NAR’s August report, released September 10, showed sales down 2.0% on the month. HousingWire noted it was the first pace below 4 million since June 2025.
Prices are not collapsing. NAR shows the median up 1.6% year over year. The new-home picture is different. Census data put August new-home sales at 684,000 annualized, up 6.4% from July and 2.0% below a year earlier. Census did not consider the monthly gain statistically significant. The one significant change was the average new-home price, down 8.8% from a year ago.
Builders are cutting. NAHB and a large national bank found 38% of builders offering discounts and 66% using incentives in September, the highest since December. If you’re shopping new construction, that is worth a conversation. Those are different measures from the existing-home median, so don’t blend them into one story about “prices.”
So the picture is mixed. Demand is soft. Prices are not falling on the existing side. Builders are paying to move inventory. Waiting for a drop in rates means betting against a Fed that just hiked and projects more.
My take
Here’s my read. The September hike didn’t make loan choice harder. It made it more honest.
For two years, the rate gap between products was small enough that buyers could pick on habit. Now the gap is a full point between a 5/1 ARM and a fixed loan, and the Fed is signaling it may not be done. That rewards discipline.
I think most buyers are better served by the fixed loan they can afford, even when it looks worse on the first-year math. An ARM makes sense in a narrow set of cases: you know you’ll sell or refinance before the reset, or your income has room to absorb a higher rate. Notice the second one isn’t a hope. It’s a budget.
The refinance escape hatch is also narrower than it was. Fratantoni’s point that refinance activity is at its slowest pace since February 2025 tells you few owners are swapping into something cheaper. Planning to “refinance later” assumes a door that is currently mostly shut. Maybe it reopens. Maybe not.
I’m also wary of a popular idea: that a 7% rate is “the” number. It isn’t. Freddie’s survey covers conventional, conforming, fully amortizing purchase loans for borrowers with 20% down and excellent credit. Your file is not that file, and neither is mine. Treat every headline price as weather, not a forecast of your own loan. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What I’d do now
No advice to buy or sell anything. Just a checklist for the structure of the decision.
1. Stress-test the budget. Take your planned loan and raise the rate by a full point in your head. If the household breaks, the loan is wrong, whatever the starting number.
2. Read the ARM’s fine print. Know how long the fixed period runs, how often it adjusts, and what caps limit each move. If you can’t explain those three, don’t sign.
3. Treat a HELOC as floating debt. Borrow from it only what you could repay from cash flow if the rate keeps rising.
4. Compare quotes on the same day. Rates move daily in this market. Two quotes gathered a week apart are not comparable, and the difference may be the market, not the lender.
5. Lock when the number works. A rate lock holds a quoted rate for a set period while your loan is processed. If the payment fits your stress test, lock it. Floating is a bet that rates fall, and this month that bet has lost five weeks in a row.
6. Ask about builder incentives. If you’re in the market for new construction, the NAHB numbers suggest there is room to negotiate on more than price.
One more note for investors who are weighing a property purchase. Insurance changes can move a rental’s numbers after you’ve made an offer. I wrote about a DSCR loan denied after an insurance quote changed the payment. Get that quote early.
If you’re weighing a purchase or a refinance this fall, Lendmire can walk you through how the current programs fit your file. Call 828-256-2183 or request a quote.
For the end-to-end picture of how these loans work — qualification, structures, and the full process — see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Did the Fed just raise my mortgage rate?
Not directly. Fixed mortgage rates follow the 10-year Treasury yield more than the Fed’s target, and that yield had been rising since late August. A fixed loan you already hold doesn’t change. Variable debt like a HELOC is the product most directly tied to the Fed’s move.
Should I take an ARM because the starting rate is lower?
Only if you can carry the loan after it adjusts. The MBA reported 5/1 ARM rates more than a point below fixed for the week ending September 18. That is real, but the rate resets after the fixed period. Buy an ARM if you have a clear plan to sell or refinance before then, or budget room for a higher rate.
Will rates fall by the end of the year?
Forecasts from the MBA and Fannie Mae put the 30-year around 6.8% by year-end, but both sit below Freddie Mac’s 7.03% print for the week of September 24. The Fed’s own projections point to another possible hike. Plan for the range, not the forecast.
Why are the rates I see quoted so different?
Publishers use different methods. Freddie Mac’s survey for September 24 showed 7.03%, the MBA’s contract rate for the week ending September 18 was 7.12%, and Mortgage News Daily’s index read 7.50% on September 28. Different dates and different loan assumptions produce different numbers. Your own quote depends on your file.
Is it a bad time to buy?
That depends on your budget, not the calendar. Purchase applications were 11% below a year ago in the MBA’s survey, so competition from other buyers is lighter. Financing costs more than it did a year ago. If the loan structure holds up under a stress test, the timing question gets smaller.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage broker with two platforms: DSCR investor lending across 41 markets, including Washington, D.C., and consumer mortgage programs in 16 states, all arranged through wholesale lending partners. This column is written by Lendmire’s founder and reflects the market as of its publication date; program terms and availability are set by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Kiplinger, Fed meeting updates, September 2026
2. TD Economics, FOMC statement
3. CNBC, Fed rate decision, September 16, 2026
4. Freddie Mac Primary Mortgage Market Survey
5. MBA Weekly Applications Survey, September 23, 2026
6. CNBC, ARM share, September 23, 2026
8. Yahoo Finance, HELOC rates, September 25, 2026
10. Census/HUD new residential sales
This article is part of Lendmire’s Mortgage News series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Top 5 Most Common Mortgage Types · Autumn Awaits: Key Homebuying and Refinancing Tips to Consider Before Fall Officially Begins · Choosing the Right Mortgage: A Comprehensive Comparison of Loan Types
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.