Fed Rate Hike Sets Tone for Final Months of 2026

The Federal Reserve raised interest rates for the first time since 2023 on September 16. This move is setting the tone for the final months of 2026, with implications for mortgage activity and the broader housing market.

Mark Fleming, senior vice president and chief economist at First American Financial Corp., will discuss the direction of monetary policy heading into the final quarter of the year in an upcoming webinar. He believes that higher rates should cool the economy, slow growth, particularly consumption, and help ease inflation pressure.

Fleming also notes that the financial markets strongly expected the Fed to raise rates, and consequently it was almost entirely 'priced in' by the market. As a result, any expectation for a significant mortgage rate reduction is increasingly unlikely.