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The Ten-Year Printed 5.00%. Your Cash-Out Refinance Just Shrank by $4,300.

By Steve Waller · September 16, 2026

The Ten-Year Printed 5.00%. Your Cash-Out Refinance Just Shrank by $4,300.

The ten-year Treasury closed at 5.00% on Tuesday, its first five handle since October 2023, and Mortgage News Daily's 30-year average reached 7.22%. The Fed raised the target range to 3.75-4.00% this afternoon on a unanimous vote, its first increase since July 2023 - and the ten-year fell on the news. On a stabilized rental underwritten to a 1.20 coverage ratio, the six-session move in the index took about $4,300 off the loan the same rent supports.

What happened

The ten-year Treasury closed at 5.00% on Tuesday. That is the first time it has printed a five handle since October 2023, and it caps a move that has run six sessions: 4.80% on 8 September, then 4.83%, 4.95%, 4.96%, 4.97% on Monday, and five percent flat yesterday.

Mortgage rates went with it. Mortgage News Daily's 30-year average reached 7.22% on Tuesday, up five basis points on the day and up from 7.07% the previous Thursday. Freddie Mac's weekly survey, which lags the daily number by design, last printed 6.76% on 10 September against 6.71% the week before and 6.35% a year ago. Thursday's survey will close most of that gap.

What the Fed did

The FOMC raised the target range a quarter point to 3.75% to 4.00% this afternoon, and the vote was unanimous. It is the first increase since July 2023 and the first rate vote of Kevin Warsh's chairmanship. The range had been held at 3.50-3.75% since July, when three members already preferred an increase, before August's inflation prints existed. CME's FedWatch had the odds near 93% going in, so the decision itself was priced.

The projections carried the news. Sixteen of the eighteen participants who submitted forecasts expect at least one further increase in 2026, and the median path adds one more hike this year and another in 2027. The median now has PCE inflation back at 2% in 2029, a year later than June's projection said. Warsh pointed to a resilient economy - the jobless rate is low, hours and openings are rising - and said "too many categories" still show price increases inconsistent with disinflation. He declined to prejudge the next meeting.

And the ten-year fell anyway. It sat near 4.965% after the announcement, down about three basis points on the day, with the two-year at 4.625%. A quarter point on the funds rate had been in the long end for a week; that is what the last six sessions were. The number your exit gets underwritten against is the one that went down on a hike. That is the whole lesson: watch the ten-year, not the announcement.

What a five-percent ten-year does to a refinance

Monday's brief covered the flipper's problem: a financed buyer whose budget shrinks as the rate rises. The other exit has a quieter version of the same problem, and it is the one worth doing the arithmetic on, because a refinance does not require winning a bid.

DSCR notes price off the ten-year plus a spread, so a twenty-basis-point move in the index is roughly twenty basis points on the note. Take a stabilized rental: $300,000 value, $2,600 rent, $6,000 in taxes and $2,000 in insurance a year, refinanced at 75% on a thirty-year amortization.

At an illustrative 7.25%, the $225,000 loan carries $1,534.90 in principal and interest, $2,202 all-in with taxes and insurance, and a lender coverage ratio of 1.18. Move the note to 7.45% and the payment is $1,566, all-in $2,232, and coverage falls to 1.16.

Two hundredths of coverage does not sound like much. Run it as a loan amount instead. Hold the same rent and underwrite to a 1.20 coverage requirement, and the maximum supportable loan goes from about $219,900 to about $215,600. Roughly $4,300 less, in six sessions, on a property whose rent did not change.

That $4,300 does not come out of the payment. It comes out of cash at closing, which is the money that was going to fund the next acquisition. The rate rise does not make the rental fail. It makes the next deal smaller.

The margin this lands on

ATTOM's most recent home flipping report, covering the first quarter, put 64,348 flips nationally at 8% of all sales, with a typical gross profit of $66,000, a gross return of 25.4%, and an average of 165 days from purchase to resale.

Texas is not that market. Gross margins in the four big metros came in at 7.2% in Houston, 5.1% in San Antonio, 4.3% in Dallas and 2.0% in Austin, and those are gross, before a dollar of rehab. A twenty-basis-point move in the exit rate is a rounding error against a 25% national return. Against a 7.2% gross margin carried for 165 days, it is not.

Houston

August closed with 38,947 active single-family listings, up 0.5% on the year, and 5.3 months of supply, flat. The median was $330,000, down 1.5%, with days on market at 54 against 52 a year ago. Sales are the number that moved: roughly 7,100 closings, down 11.5%.

Inventory is not building because more houses are arriving. It is building because fewer buyers can reach the ones already there, and this week made the reach longer.

The costs that are not the rate

Two line items keep moving independently of the Fed, and both sit in the rehab budget rather than in the loan.

Building materials were up 6.7% over twelve months as of July, and the increase is not evenly shared. In NAHB's builder survey, small builders reported a median material cost increase of 9.1% against 1.8% for builders starting a hundred homes or more. A one-off rehab buys at the small-builder price.

On insurance, the Dallas Fed reports the median Texas homeowner paid 60% more in 2024 than in 2019, against 30% nationally, with the annual increase slowing from 18.7% in 2024 to 4.3% in 2025. The slowdown is real, but it is a slowdown on top of a step change, and it is carried for the whole hold.

The week ahead

What we are financing

Nothing this week changes which deals work. It changes where the number is, and it has moved twice in six days.

If you have a purchase test you ran against a 6.7% exit, it is now two revisions out of date. If you have a refinance you were planning for the fourth quarter, run it at today's index rather than the one you were quoted in August, and check the proceeds rather than the payment. The payment barely moved. The proceeds did.

Both calculators on the site take the rate as an input, so the rerun is a two-minute job rather than a guess: the deal calculator for the flip, the DSCR calculator for the rental takeout, and the comparison between the two for the files that could go either way.

Sources

Market data is from public sources and is provided for information only. Nothing here is an offer of credit, a rate quote, or investment advice. Financing is subject to underwriting, lender approval, appraisal or valuation, title, insurance, property eligibility and program availability.

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