Two Fed Officials Voted for a Hike. Mortgage Rates Fell Anyway, to 7.24%.

By Steve Waller · October 30, 2026

Wednesday's question, answered

Wednesday's brief asked whether the Fed's tone or Thursday's inflation number would set the 10-year. The answer came in two steps. The Fed's tone pushed the 10-year up to 5.05% on Wednesday, its highest close since October 21. Thursday's inflation number brought it straight back down to 4.98%, because core PCE came in exactly where forecasters expected it, at 3.1%. The 10-year did not close above 5.10%, so last week's relief held. Freddie Mac's survey fell for a second straight week, to 7.24%.

What the Fed did

The committee held its target range at 3.75% to 4.00%, but the vote was 10 to 2, down from 12 to 0 in September. Governor Lisa Cook and Cleveland Fed President Beth Hammack both dissented in favor of another quarter-point increase. The statement upgraded the economy to a "strong" pace from "solid" and replaced its direct tie to returning inflation to 2% with the line that "the accumulation of more information will help" set policy.

Chair Warsh did not rule out December. Asked whether colleagues were on board with a December increase, he said only that the committee would work out "the appropriate protocol." He also said the Fed has not yet achieved price stability, and noted a stable correlation this year between oil prices and interest rates. Markets priced roughly an 84% chance of a December hike before the decision.

The bond market's reaction is the part that matters for a loan. The 2-year Treasury fell to 4.67% from 4.70%, while the 10-year rose to 5.05% from 4.99%. Short rates eased on the hold; long rates rose on the prospect of more inflation. Mortgage pricing follows the long end, which is why the hold itself did nothing for borrowers on Wednesday.

What Thursday's numbers said

• Growth. Third-quarter GDP grew at a 3.4% annual rate in the first estimate, up from 2.2% in the second quarter and ahead of the roughly 3% expected.
• Inflation. The September PCE price index rose 0.5% for the month and 3.6% from a year earlier. Core PCE rose 0.3% for the month and 3.1% from a year earlier, matching the forecast.
• The consumer. Real disposable income fell 0.3% in September, real spending was flat, and the saving rate was 3.8%. Prices are outrunning paychecks.

A strong growth number plus a 3.6% headline would normally push yields up. The market looked past both because core inflation did not surprise. The 10-year closed Thursday at 4.98%, back below 5%.

Where mortgage rates landed

Freddie Mac's 30-year average fell to 7.24% from 7.32%, and the 15-year fell to 6.60% from 6.68%. A year ago the 30-year was 6.17%. Mortgage News Daily's daily 30-year index, the faster number, fell six basis points Thursday to 7.29%.

On a $264,000 loan, 20% down on a $330,000 house, principal and interest at 7.24% is about $1,799 a month. At the 7.40% Freddie printed two weeks ago it was about $1,828. Hold the payment at $1,828 and today's rate carries about $268,200 of loan, roughly $4,200 more budget for your exit buyer. It is real, but it is small next to the year: at last October's 6.17%, the same $264,000 cost about $1,612, and today's rate stretches that payment to only about $236,500 of loan.

What this does to a deal you are underwriting now

• Fix and flip. Two weeks of rate relief added about $4,200 to a typical buyer's budget. Do not spend it in your offer. With two Fed officials already voting for a hike and December live, size the exit to today's rate, not to further declines, and confirm the deal clears ARV times 70 to 75%, less repairs and closing costs.
• Long-term rentals. On a $250,000 takeout at an illustrative 7.24%, principal and interest is about $1,704 a month, about $15 less than at Wednesday's 7.33%. Coverage is still decided in the last sixty dollars of rent. Use the rate on your own term sheet.
• Ground-up construction. A 3.4% growth quarter keeps labor and materials tight. Carry contingency in the budget and assume the completed-value buyer faces rates near today's, not lower.
• Single-family resale. Nationally, pending home sales fell 7.3% in September and 11.3% from a year earlier, and the South fell 12.0% from a year earlier. Fewer contracts mean more sellers sitting with listings into the winter, which is when an offer built from the formula gets a hearing.
• Multifamily. Falling real incomes put pressure on rent growth before they show up in vacancy. Underwrite renewals flat and keep the cap-rate assumption tied to a 10-year near 5%.

The week ahead

• Sunday, November 1. The weekly recap and look-ahead.
• Tuesday, November 3. Election Day. Expect bond-market volatility around the midterm results.
• Thursday, November 5. Freddie Mac's survey, the first to fully capture this week's round trip in the 10-year, and weekly jobless claims.
• Friday, November 6. The October jobs report from BLS, the next data point the Fed will weigh before December.

The question for Sunday's recap is whether a 10-year below 5% can hold with a December hike priced at better than four in five. If the jobs report runs hot, the two dissents become the committee's majority view and this two-week rally is likely over.

The full report, and every earlier one, is available on ACP's website at acp-lending.com. Investors can sign up at acp-lending.com/investor-brief to receive new reports by email.

Sources

• Federal Reserve, FOMC statement and press conference, Oct 28, 2026
• U.S. Treasury, Daily Treasury Par Yield Curve Rates, October 2026
• Federal Reserve H.15 Selected Interest Rates
• BEA, GDP (Advance Estimate), 3rd Quarter 2026
• BEA, Personal Income and Outlays, September 2026
• Freddie Mac Primary Mortgage Market Survey, Oct 29, 2026
• Mortgage News Daily, daily mortgage rate index
• NAR, Pending Home Sales, September 2026

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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