The Federal Reserve raised its target rate on September 16, 2026, and mortgage rates rose with it. This post covers what changed and what to do about it on a DC purchase or refinance.
What changed in September 2026
- The Fed raised its target rate. On September 16 the Federal Open Market Committee lifted the federal funds target range a quarter point to 3.75–4.00%, its first increase in more than three years, on a unanimous vote. Its statement: "Inflation remains elevated." (Federal Reserve)
- Mortgage rates rose. Freddie Mac's national survey showed the 30-year fixed average higher for the week of September 17 than the week before and higher than a year earlier. (Freddie Mac PMMS)
- The 10-year Treasury moved above 5% (Treasury daily yield curve), pushed up by higher oil prices feeding inflation, heavy federal borrowing, and the Fed's move to raising rates.
- The Fed may raise again this year. The Fed's own projections put the median funds rate at 4.1% at year end (central tendency 4.1–4.4%), which leaves room for another increase at the October or December meeting.
Freddie Mac's survey is a national average. Today's DC pricing is on our rates page.
Why mortgage rates follow the 10-year Treasury
Mortgage rates follow the 10-year Treasury yield more closely than the federal funds rate. The 10-year yield rose this year on persistent inflation and heavy Treasury borrowing, and mortgage rates rose with it. A Fed pause or cut will not lower 30-year fixed rates until the 10-year yield comes down. Watch the 10-year yield and the monthly inflation reports.
Steps for DC home buyers
- Qualify at today's rate. A pre-qualification based on current pricing tells you what you can close on. If rates fall later, you can refinance.
- Ask the seller for a closing-cost credit or a temporary buydown. A seller can pay your closing costs or fund a temporary buydown. A seller credit applied to a buydown lowers your payments in the first two years by more than the same dollars taken off the price.
- Fannie Mae and Freddie Mac waive pricing adjustments for first-time buyers at or below 120% of area median income. Fannie Mae and Freddie Mac waive their loan-level pricing adjustments for first-time buyers with income at or below 120% of area median income, and DC counts as a high-cost area. The mechanics are in our Capitol Hill rowhouse guide.
- Check whether your loan is standard conforming or high-balance. Loans up to $832,750 price as standard conforming; DC's high-cost ceiling is $1,249,125, and loans in between price as high-balance. The tier changes both the rate and the minimum down payment.
Steps for DC homeowners
- If your first mortgage is from 2020–2021, keep it in place. Replacing a low first mortgage with a cash-out refinance reprices the whole balance at today's rates. A home equity loan or line of credit as a second lien leaves the first alone. Start with our equity options for long-time DC owners.
- DC charges no recordation tax on a residential refinance. With the ROD 21 affidavit, a refinance or second lien on a home of five or fewer units is exempt from DC recordation tax under D.C. Code § 42-1102(21). Details in the cash-out guide.
- If you bought in 2023–2025, set a refinance target rate. A rate-and-term refinance depends on the 10-year yield coming down. Tell us your target rate and we will tell you when the market reaches it. The refinance savings tool shows what a given drop would be worth on your loan.
Reports that could move mortgage rates this fall
Lower inflation reports, falling oil prices, or a weak jobs report would pull the 10-year yield down, and mortgage rates with it. A high inflation report or a second Fed increase would push both up. Our rates page shows the date of each update, so you can see DC pricing on any given day.
Book a 15-minute call to go over your numbers, see today's rates, or get pre-qualified in two minutes with no credit pull.