The Fed Raised Rates. Here's What That Means for Your Home, Minus the Economist-Speak

What did the Fed actually do?

The Fed raised its benchmark rate, the federal funds rate, by a quarter of a percentage point. It now sits between 3.75% and 4.00%. The reason is that inflation is still running hotter than the Fed would like, and raising rates is its way of cooling things down. The Fed has also signaled it may raise rates once more before the end of the year.

Did the Fed just raise my mortgage rate?

Not directly, and this is the part most people get wrong.

The federal funds rate is what banks charge each other for overnight loans. Your 30-year mortgage follows a different signal: the bond market, especially the 10-year Treasury.

Bond investors saw this rate hike coming weeks in advance, so mortgage rates started climbing in late August. By the time the Fed made it official, the mortgage market had mostly moved already.

Here's where rates stand. According to Freddie Mac, the average 30-year fixed rate was 6.95% for the week ending September 17. That's up from 6.76% the week before and 6.26% a year ago.

Some things do respond directly to the Fed. These include HELOCs, credit cards, and adjustable-rate mortgages when they reset. If you have any of those, it's worth checking your next statement.

How much does this change a monthly payment?

Say you borrow $800,000. That's not unusual in North County.

• At last year's rate of 6.26%, principal and interest comes to about $4,931 a month.
• At today's 6.95%, it's about $5,296 a month.

That's roughly $365 more every month for the exact same house. It's a car payment, or a very nice dinner out every week, going to the bank instead.

So what's happening to home prices in North County?

Here are the numbers. The median sales price in North San Diego County was $1,200,000 in September, down from $1,232,500 in August. That's a dip of about 2.6%.

Before anyone reaches for the antacids, keep two things in mind.

First, the Fed hike didn't cause this. Most homes that closed in September went into contract in July or August, weeks before the Fed made its move.

Second, one month is a snapshot, not a trend. Median prices move up and down from month to month depending on which homes happen to sell. A few big ranch properties closing in one month can raise the median, and a batch of condos can lower it. The change is real, but it doesn't mean the market is falling.

Higher rates do affect the market in two ways. Some buyers get priced out, which cools demand. But plenty of homeowners are sitting on mortgage rates in the 3s and have no intention of giving them up. That keeps the number of homes for sale low, which tends to hold prices up.

Want a closer look at your own neighborhood? Check out our guides to what homes are worth in Escondido and Valley Center.

I'm thinking about buying. Now what?

• Get pre-approved and ask about rate locks. Know your number before you fall in love with a kitchen.
• Ask about seller-paid rate buydowns. In a slower market, sellers are often more willing to pay down your rate than to cut their price. The effect on your monthly payment can be bigger.
• Don't try to time the bottom. Nobody can reliably predict rates, including the people who get paid to predict rates.

I'm thinking about selling. Now what?

Today's buyers shop by monthly payment, and they notice everything. Homes that are priced right and look great from day one still sell. Homes that sit on the market end up getting discounted.

That's where our Cabrillo Concierge Pre-Listing Service comes in. We cover painting, repairs, staging, and landscaping upfront, and you don't pay anything until closing.

I'm not going anywhere. Does this affect me?

If you have a fixed-rate mortgage, your payment didn't change at all. Enjoy your coffee.

If you have a HELOC or an adjustable-rate loan, check your statements, because those rates may be on the move.

Frequently Asked Questions

Did the Fed raise mortgage rates?
Not directly. The Fed raised an overnight rate that banks charge each other. Mortgage rates follow the bond market, and they had already risen before the Fed announced its decision.

What is the average 30-year mortgage rate right now?
Freddie Mac reported an average of 6.95% for the week ending September 17, 2026. Your own rate depends on your credit, down payment, and loan type.

Are home prices dropping in North County San Diego?
The median sales price in North San Diego County was $1,200,000 in September, down from $1,232,500 in August. One month's change isn't a trend. Tight inventory has helped support prices even as rates have risen.

Is this a bad time to sell my home?
It depends more on your goals than on the Fed. Homes that are well priced and well prepared are still selling. A free valuation will show you where your home stands today.

Curious what your home is worth in today's market? Get a free home valuation or call Andrew Behneman directly at (760) 580-1388. He speaks fluent Fed and fluent human.

Andrew Behneman is Broker/Owner of Cabrillo Team Realty (DRE #01488693) in Old Escondido. This article is general information, not financial or lending advice. Talk to a licensed mortgage professional about your situation.