Insights and Analysis: Mortgage and Real Estate Capital Markets Update with Jeff Rosato, SVP of Capital Markets at NMB NOW.
Key Takeaways
Mortgage rates remained elevated, with the Freddie Mac average 30-year fixed mortgage rate reaching 6.95% and the 10-year Treasury yield closing at 5.00%. The Federal Reserve raised its benchmark Fed Funds Rate by 0.25 percentage points, bringing the target range to 3.75%-4.00%, as persistent inflation, renewed oil-price pressures, and resilient economic data continue to shape monetary policy. The latest Federal Reserve economic projections indicate that committee members expect at least one more 0.25% rate hike this year, while markets continue to assess the potential path of interest rates through 2027. With the economic calendar relatively light, mortgage rates and bond markets are likely to remain sensitive to Federal Reserve commentary, inflation expectations, energy prices, and incoming economic data.
Here’s a look at this week’s update on the major bond market indices, scheduled Federal Reserve meetings, upcoming market-moving economic data releases, and general bond market trends.
Bond Market Indices
“As expected, the Federal Reserve increased its benchmark Fed Funds Rate by .25% at the conclusion of its September FOMC meeting last Wednesday.”
Market Overview and Rate Trends
Mortgage rates remained elevated last week at the highest levels since early 2025. The Freddie Mac average 30-year fixed rate is at 6.95% and was up very sharply by 19 basis points compared to the prior week. That puts the max APR this week for 30-year fixed-rate loans at roughly 8.45% (6.95 + 1.50). The 10-Year Treasury yield closed last week at 5.00%, which was up by 1 basis point for the week.
Federal Reserve Rate Decision and Economic Outlook
As expected, the Federal Reserve increased its benchmark Fed Funds Rate by 0.25% at the conclusion of its September FOMC meeting. The vote was unanimous, with all 12 committee members voting for the increase. The rate hike moves the effective Fed Funds Rate range from 3.50%-3.75% to 3.75%-4.00%. The committee cited persistent inflation, renewed oil-price pressures, and resilient economic data as justification for the rate hike.
The FOMC also published a new Summary of Economic Projections with this rate decision. The projections show that the committee members expect at least one more 0.25% hike this year, with four members seeing two more rate hikes as possible. Likewise, the market is pricing in about 0.75% of additional hikes through June of 2027.
The FOMC meeting and rate decision showed that the Fed has shifted back to an inflation-focused policy stance as the war in Iran has caused oil and energy prices to spike dramatically. After the announcement, the bond markets rallied moderately and stopped the bleeding in a market that has seen the 10-year Treasury yield reach 5%, which is the highest it’s been since 2007.
The U.S. economy has shown enough resilience that the Fed feels it can withstand the tighter inflation-fighting policy stance. The economy may be strong enough overall to justify the Fed’s rate hike, but further tightening through the end of the year and into next year risks putting additional pressure on two areas that are already showing signs of weakness, labor demand and housing. The Fed will continue to be dependent on fresh data to shape its strategy going forward.
Economic Calendar and Bond Market Outlook
The economic calendar is very light this week, with no major market-moving reports expected. However, there are a handful of Federal Reserve speaking engagements throughout the week where FOMC members will further elaborate on their rate-hike decision-making process.
So far, MBS prices are up slightly by about 10-15 basis points compared to where they previously closed, and the 10-year Treasury is down by about 5 basis points to 4.95%.
Looking Ahead
Mortgage rates and Treasury yields remain elevated as markets continue to respond to inflation pressures, energy prices, Federal Reserve policy, and incoming economic data. With the Fed’s latest rate decision now behind us and additional policy guidance ahead, borrowers and real estate professionals should remain focused on market developments and be prepared for continued volatility.
Stay tuned each week for the latest insights from Jeff Rosato on mortgage rates, the bond market, Federal Reserve policy, and the economic factors shaping today’s housing market.
