The Fed Raised Rates 0.25%. Did Mortgage Rates Go Up 0.25%?
Every few weeks, you’ll hear something on the news like: “The Fed meets this week.”
And suddenly everyone is talking about interest rates.
But have you ever wondered what actually happens at those meetings? Who is making the decisions? What rate are they changing? And does that mean mortgage rates change too?
This week’s Federal Reserve meeting gives us a good opportunity to talk about exactly that.
First, Who Is “The Fed”?
The Federal Reserve is our nation’s central bank. Within the Fed is a group called the Federal Open Market Committee—or FOMC—which makes key decisions about monetary policy and interest rates.
They meet eight times a year to look at what’s happening in the economy and decide whether monetary policy needs to change.
They’re primarily trying to balance two things: keeping inflation under control while supporting a healthy labor market.
When inflation is running too hot, the Fed can raise short-term interest rates to try to cool things down. When the economy needs more support, it can lower rates to encourage borrowing and spending.
Of course, the real economy is considerably more complicated than that.
So What Happened This Week?
On Wednesday, the Fed raised its benchmark interest rate by 0.25%, bringing its target range to 3.75%–4.00%.
The Fed said the economy continues to expand at a solid pace, while inflation remains elevated.
But here’s the part I think causes the most confusion: The Fed did not raise “mortgage rates” by 0.25%.
The rate the Fed changed is the federal funds rate, a short-term interest rate.
Changes in Fed policy can influence borrowing costs throughout the economy, but the Fed does not directly set the rate on a 30-year mortgage.
So What Does This Mean for Mortgage Rates?
Financial markets are always looking ahead.
By the time the Fed meets, investors often have a pretty good idea of what the Fed is likely to do. If the decision is exactly what everyone expected, much of it may already be reflected in bond prices and mortgage rates.
That’s why the Fed can change rates and mortgage rates barely move. And sometimes mortgage rates can move even when the Fed doesn’t change rates at all.
Markets are also listening closely to what the Fed says about inflation, employment, the economy and what may come next.
So the next time you hear “The Fed meets tomorrow…”, don’t automatically assume mortgage rates are about to go up—or down.
Markets don’t just react to what happened. They react to how what happened compares with what they expected.
And that’s why mortgage rates can sometimes move before the Fed meeting, barely move when the decision is announced—or even move in a direction that seems completely opposite from the headline.
Once you understand that, Fed Day starts making a whole lot more sense.
And if you’re ever wondering what a Fed announcement actually means for your mortgage decision, I’m always happy to help put it into perspective.
Even if it’s just a quick question. No pressure. Just clarity.
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Blog post date: Friday, September 18, 2026
