If you took the last month off and went fishing, welcome back, hope you caught a lot of fish. A lot changed while you were gone.
Four weeks ago, most of Wall Street figured the Federal reserve was set for the rest of the year. Futures traders are putting the odds of an interest rate hike Wednesday September 16th somewhere around 85 to 90 percent, though I am not convinced. Not a cut. A hike. That’s a big swing in a short period, and it’s worth understanding why, because it affects everything from your savings account to what a new mortgage costs.1
Let me walk through it. August CPI (released Friday September 11th). Consumer prices rose 0.4% for the month, which put the annual rate at 3.4%. That’s unchanged from July and right in line with what economists expected. Strip out food and energy and “core” CPI rose 0.3% for the month, a bit hotter than forecast, with the annual core rate easing to 2.4%.2
Gas is doing a lot of damage. Gasoline prices jumped 3.9% in August alone and are up more than 27% from a year ago. BLS (Bureau of Labor Statistics) noted gas accounted for over a third of the entire monthly increase.2
Diesel is worse. When diesel runs up, everything that moves on a truck eventually costs more.
Shelter (Housing) is behaving. Housing costs rose 0.3% for the month and 3.0% over the year, down from 3.2% in July. For those of us in the housing business or looking to purchase a home, that’s good news.2
Wholesale prices are the warning light. August PPI (Producer price index) came in at 5.4% year over year. Final demand energy rose 4.2% in a single month, with diesel up 24%. Producer prices tend to show up in consumer prices later, so that number is why nobody is declaring victory.3
The Fed’s preferred gauge watches PCE (Personal Consumption Expenditures Price Index), which came in at 3.7% annually for July with core at 3.3%. Here’s the worst part, core PCE was 3.3% in April, 3.4% in May, 3.3% in June, and 3.3% again in July. Four months, essentially no progress. The August PCE reading doesn’t arrive until September 30, which means the Fed makes next week’s decision without it.4
Jobs came in strong. Payrolls added 162,000 in August against expectations of about 56,000, the best month since March. Unemployment held at 4.1%, and June and July were revised up by a combined 55,000. Wages are up 3.1% over the year. While this is positive for many, labor markets that firm remove the Fed’s excuse to go easy on inflation by not raising rates.5
Three things told us where new fed chairman Kevin Warsh’s head is at. The July Federal Reserve minutes (released August 19). The committee voted 9 to 3 to hold rates steady, with Cleveland’s Beth Hammack, Minneapolis’ Neel Kashkari, and Dallas’ Lorie Logan all dissenting in favor of a quarter-point increase. Three dissents pointing the same direction is rare. The minutes went further, many participants judged that tightening would likely be necessary if inflation didn’t come down. Officials pointed at tariff pass-through, Middle East energy costs, and the sheer demand created by the AI data center buildout.6
Jackson Hole (August 28). Warsh said the Fed will “have work to do” if policymakers aren’t confident inflation is heading back to 2%. He also said financial conditions don’t look restrictive enough, which is about as close as he’s come to flagging a hike. He deliberately refuses to give forward guidance, so markets are left reading the data alongside him rather than being told what’s coming. Hike odds rose sharply after that speech.7
The 10-year Treasury bond crossed 5% for the first time since 2007. The 30-year bond has been pushing toward levels last seen in 2007. That’s not just a Fed story. It reflects global energy disruption, heavy government borrowing, and investors demanding more compensation to hold long-dated paper.8
What this means for your mortgage, Freddie Mac’s 30-year fixed averaged 6.76% as of September 10, up from 6.71% the week before and 6.67% four weeks ago. The 15-year
sits at 6.09%, rates have drifted up about a tenth of a point over the month, which is remarkably calm given what the 10-year note did.9
A Fed hike does not directly raise 30-year mortgage rates. The Fed sets overnight rates. Mortgages track longer-term yields and mortgage-backed securities. Sometimes a hike lowers long rates, if markets read it as the Fed defending its credibility. What matters more is the updated rate projections and whether the Fed signals “one and done” or something more.10
If you carry a home equity line, it’s tied to prime, and prime moves lockstep with the Fed. A quarter point hike typically shows up on your next statement. For reverse mortgage borrowers, higher rates hit both directions. How much you could access up front is calculated using longer-term rates, so as those rise, the initial available amount shrinks. But if you already have a line of credit open, the unused portion grows at your note rate plus the mortgage insurance premium rate, which means a higher-rate environment compounds your available funds faster. Existing lines aren’t clawed back when rates move.11, 12
Timing matters, and it matters differently depending on whether you’re setting one up or already have one.
In my opinion the energy shock is doing most of the inflation work right now, and the Fed can’t fix the Strait of Hormuz with a rate hike. What it could do is protect its credibility, and that seems to be the priority. If you’re weighing a move, a refinance, or how to turn home equity into retirement cash flow in this environment, the math has genuinely changed in the last four weeks. Let’s talk!
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Have questions or ready to take the next step in your home financing journey? I’m here to help.
Call: (858) 526-3037
Email: carl.spiteri@originpoint.com
Carl Spiteri
Producing Partnership Branch Manager
NMLS ID: 286890
Licensed in: AZ, CA, CO, FL, ID, MI, MT, NV, OR, SC, TN, TX, WA, WY
Sources
1. CME Group, “CME FedWatch Tool”; September 11 probability corroborated by Reuters.
2. U.S. Bureau of Labor Statistics, “Consumer Price Index – August 2026”; forecast comparisons corroborated by Reuters.
3. U.S. Bureau of Labor Statistics, “Producer Price Index – August 2026.”
4. U.S. Bureau of Economic Analysis, “Personal Income and Outlays, July 2026,” released August 26, 2026.
5. U.S. Bureau of Labor Statistics, “The Employment Situation – August 2026”; consensus forecast corroborated by Reuters.
6. Board of Governors of the Federal Reserve System, “Minutes of the Federal Open Market Committee, July 28-29, 2026,” released August 19, 2026.
7. Federal Reserve Chairman Kevin Warsh, “Keynote Remarks at the 2026 Jackson Hole Economic Policy Symposium,” August 28, 2026.
8. U.S. Department of the Treasury, “Daily Treasury Par Yield Curve Rates,” September 15, 2026. 9. Freddie Mac, “Primary Mortgage Market Survey,” weekly averages as of September 10, 2026.
National average rates accurate as of 09/10/2026 from Freddie Mac and are not advertised rates from OriginPoint.
10. Federal Reserve Bank of St. Louis, “How Does the Federal Funds Rate Affect Consumers?” 11. Consumer Financial Protection Bureau, “What You Should Know About Home Equity Lines of Credit.” 12. Consumer Financial Protection Bureau, “Reverse Mortgages: A Discussion Guide.”
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