Fed day is not a mortgage rate announcement, and that matters for your payment

The Fed announces its decision at 2 PM ET today, and the market expects a hold at 3.75% to 4.00%. That sounds like it should freeze mortgage rates in place. It does not work that way. The Fed sets a short term policy rate. Mortgage rates follow the bond market, which reacts to what the Fed says about inflation and what might come in December, not just the hold itself.

The 30-year fixed sits at 7.32% for the week ending Oct 22, down from 7.40% the week before, per Freddie Mac. That is the first weekly decline since August, and it is still well above 6.19% a year ago. In other words, rates eased slightly, but the era of cheap money is not back.

Meanwhile, new home sales slipped 0.6% in September to a 676,000 annual rate, with the median new home price down 3.9% from a year ago to $400,400. Builders and sellers are adjusting, just like Denver sellers have been: more than half of active metro listings took a price cut in early October.

So what should a Central Park buyer do with Fed day? Ignore the headline. Watch the tone. If the statement leans hawkish on inflation, bond yields can rise and mortgage rates can follow, hold or no hold. If it leans dovish, the opposite. Either way, the negotiating window that is open right now, price cuts and inventory at 4.76 months, does not depend on one afternoon’s announcement.