> ## Content Index
> Fetch the complete content index at: https://www.mortgagemomradio.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# The Fed Raised Rates Again — So Why Didn't Mortgage Rates Move?
- URL: https://www.mortgagemomradio.com/the-fed-raised-rates-again-so-why-didnt-mortgage-rates-move/
- Published: 2023-08-03T21:00:00.000Z
- Updated: 2026-09-04T17:36:42.000Z
- Description: The Fed hiked to the highest level in 22 years and mortgage rates barely twitched. Debbie explains why mortgages follow mortgage-backed securities instead of the Fed, what Powell said he'd watch before September, and the rule that matters most: budget the payment for 24 months.
- Author: Deborah Marcoux
- Tags: Podcast, Mortgage Mom Radio, #episode-backfill

Mortgage Mom Radio • “Fed Raised Rates” • Live show from Thursday, August 3, 2023 • 58 minutes • Hosted by Debbie Marcoux, NMLS #237926

The Federal Reserve raised the Fed funds rate a quarter point to the highest level in 22 years — and mortgage rates barely twitched. Debbie explains why that happened, what the Fed said it will be watching before September, and the part that matters most if you're shopping right now: budget the payment you're signing for, not the payment you're hoping to refinance into. Plus when a rate-and-term refinance actually pencils, and what it really costs.

## Key takeaways

- **The Fed hiked a quarter point to 5.25–5.50%, the highest in 22 years, and mortgage rates were essentially unchanged.** Two reasons: the hike was fully expected and already priced in, and mortgage rates track mortgage-backed securities, not the Fed funds rate.
- **What the Fed *does* move directly:** HELOCs, home equity loans, credit cards and car loans. That's why buying out a partner with an equity line at that moment meant double-digit rates, while a first mortgage did not.
- **Powell named exactly what he's watching before September:** two jobs reports, two CPI inflation reports, and one employment cost index. Debbie's call: one more hike in September, then a long hold — possibly 15 to 18 months. For reference, in the 2018 cycle the Fed cut seven months after the last hike, and mortgage rates improved steadily during that stretch.
- **Core inflation was running 4.6% against a 2% target,** and the Fed's own forecast didn't have it reaching goal until 2025\. That's what "higher for longer" actually means.
- **Rates were around 7% to 7.25%,** and points or seller-paid concessions could get you into the high sixes. Historically that's close to the 30-year average, not a crisis rate — it only feels extreme because money was cheap for so long.
- **Do not buy a payment you can only afford if you refinance by Christmas.** Debbie's rule on this show: budget that payment for **24 months**. If we can refinance you in twelve, fantastic — but sign up for something you can carry.
- **The recession everyone was promised never showed up.** One reputable publication called a 100% chance of recession in 2023; instead the economy was growing near 2% with unemployment at 3.6%. Home values dropped about 10% from mid-2022 through the first quarter of 2023 and had already started climbing again.

## Chapters

- 01:00Back after two weeks off — and the Fed moved
- 03:00Reading the week's mortgage market update
- 04:00The hike: 5.25–5.50%, highest in 22 years
- 05:00What Powell said he'll watch before September
- 07:00Why they'll hold rates rather than cut quickly
- 11:00Why mortgage rates didn't move on the announcement
- 16:00Where rates are: 7% to 7.25%, and buying them down
- 22:00Historically normal rates, and the plan that goes wrong
- 23:00Budget the payment for 24 months
- 26:00When a rate-and-term refinance is worth doing
- 28:00What a refinance actually costs, and "no fee" explained
- 33:00Is now a good time to buy?
- 36:00Buy, refinance, rent it out, buy again
- 43:00Q&A: how long a pre-approval lasts, and does it travel?
- 47:00Q&A: buying out a partner without losing a 3% rate
- 52:00Blended rate: when a 7% refinance beats a 2.5% first

## Questions answered on this show

### “Is now a good time to buy?”

Yes. Inventory is low, rates are up, and there are far fewer buyers in the market — but a well-priced home still draws competition. The moment rates come down, everyone who has been sitting on the sidelines floods back in and it turns into what we saw in 2020, with values climbing again. Buy at today's prices, refinance when rates fall, and you're better off than the buyer who waited. It's a particularly good window for a first-time buyer who needs a seller willing to accept FHA financing, a lower down payment, or a slightly longer escrow — those things get much harder to negotiate when the market is hot.

### “How long is my loan application good for, and is it only good for one area?”

Your application lasts as long as your documents do, and each document has its own clock: credit report 120 days, bank statements 60 days, pay stubs 30 days. Keep feeding us updated documents and your pre-approval technically never expires. What changes it is a change in *you* — a new job, a lower score, a car loan that added a payment.

On location: it depends on your job. If you work from home, or you're a firefighter, railroad worker or dock worker with steady time on and time off, it doesn't matter where you buy — Debbie has had firefighters stationed in Los Angeles buy primary residences in Texas. If you're a teacher moving from California to Arizona or Nevada, we need the transfer already lined up: an offer letter showing where you're going and what you'll earn. If you want to move first and find the job after, there are loans for that too, but they require a much larger down payment.

### “I own half a rental at under 3%. My partner wants to sell me his half and I want to keep that rate. What are my options?”

There's no way to increase the loan you already have and keep its terms, so the only way to keep the 3% is to keep that exact mortgage — which means either buying your partner out in cash, or taking a second: a home equity line or home equity loan. Those are tied to the Fed funds rate, so at the time of this show they were in the double digits.

Then run the blended rate. If you owe $200,000 at 3% and need another $200,000 to buy him out, blend 3% against a double-digit second across the full $400,000 — a complete refinance at 7% may genuinely cost less, cash flow better, and pay less total interest than keeping them separate. If you owe $200,000 at 3% and only need $50,000 or $60,000, the equity loan wins even at a high rate, because the blended rate stays low. It comes down to the actual numbers, which is exactly what the blended rate calculator is for.

## The numbers behind this episode (week of August 3, 2023 — averages, not quotes)

- Fed funds target: raised a quarter point to **5.25–5.50%** — the highest level in 22 years
- 30-year mortgage rates: roughly **7% to 7.25%**, with the high sixes reachable by paying points or using seller concessions
- Core inflation (the Fed's preferred gauge): **4.6%**, against a **2%** target
- Unemployment: **3.6%**; economy growing near **2%**
- Home values: down about **10%** from mid-2022 through the first quarter of 2023, already recovering
- Median sale price for context: about **$450,000** nationally, about **$700,000** in Southern California
- Home equity lines and home equity loans: **double digits**, because they track the Fed funds rate directly

*Your rate depends on FICO score, property type, loan balance, and loan purpose. These are national conforming averages for context, not a quote.*

### Run your own numbers before you decide

Call [844-935-3634](tel:8449353634) (844-WE-LEND-4), [start an application](https://www.mortgagemomradio.com/apply/), or use the [mortgage calculators](https://www.mortgagemomradio.com/tools/) — including the blended rate calculator. Get the weekly rate rundown in the [newsletter](https://www.mortgagemomradio.com/newsletter/).

Full transcript (lightly edited for clarity) 

*Auto-generated captions cleaned for readability. Commercial breaks, sponsor messages, licensing recitations, and repeated housekeeping have been trimmed; licensing information appears at the bottom of this page.*

### What happened while I was away

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, I'm the Mortgage Mom. I've taken the last two weeks off because I've been moving — we had to pull the whole studio down and set it back up — and I'm finally back in the saddle. So what happened during the move? The Fed had another meeting and decided to increase interest rates again by a quarter of a percent.

Today we're going to talk about what that means for you, what it's done to mortgage rates, what we're looking at long term, when we start to see them bring rates down, and what's happening with the economy and with jobs.

### Reading the week's market update

I'm going to read you the weekly newsletter I get. It keeps me up to date, and it explains what to expect going forward.

"This past week home loan rates were unchanged despite the Fed raising rates to the highest levels in 22 years. On Wednesday the Federal Reserve raised the Fed funds rate to a range of 5.25% to 5.50%, and this move was widely expected." Everybody expected it. Last time I did a show about the Fed, I told you they had *not* hiked, but that we expected them to at the next meeting — and here it is, they did it.

"Fed Chair Powell also shared that if the data comes in strong over the next two months, they will raise rates again in September." So we're probably looking at another hike. "What data was the Fed talking about? Mr. Powell was specific: two jobs and CPI inflation reports and one employment cost index garner most of their attention before the Fed meets again in September."

"One of the main reasons interest rates remain high and the Fed has continued to raise is the underlying resilience of the economy. Many economists, market watchers and central bankers were calling for a recession by the middle of this year — in fact one reputable publication back in November said there was a 100% chance of a recession in 2023\. Fortunately or unfortunately, depending on how you look at it, the economy is currently growing near 2% and unemployment is at 3.6%, which are not conditions that lead to a recession."

So many of you have been sitting on the fence waiting for the ball to drop. We talked about that on the last show too. It didn't happen, it hasn't happened, and at this point they don't see it happening.

"At the very least we should be prepared for the Fed to hold the Fed funds rate at current levels for quite a bit longer." I've said that in previous episodes as well — when they get to the point where they feel inflation is under control, we are not going to see them immediately start cutting. They're going to hold, and hold for quite some time.

"The Federal Reserve wants to see inflation come down to 2%. The Fed's favorite gauge of inflation is currently running at 4.6%, so there is a lot of wood to chop. In fact the Fed's forecast calls for core inflation to reach its goal in the year 2025\. So when we hear 'higher for longer,' that's what we mean. For reference, in the last rate hiking cycle back in 2018, the Fed cut rates seven months after the last hike — and during that same time home loan rates steadily improved. Bottom line: the Federal Reserve may very well be done hiking rates; however, long-term rates may likely edge lower slowly. Why? The economy is slowing slowly, unemployment is rising slowly, and inflation is coming down slowly."

I thought that was a great piece to read because it really explains where we're at. Jobs are slowing, inflation is improving, everything is moving slowly — but what they're doing is working.

### Why mortgage rates didn't move

One thing worth going back to: why didn't mortgage rates really change after the announcement? We've talked about this in previous shows and I'm going to say it again. Mortgages are not tied directly to the Federal Reserve prime rate. Home equity lines of credit, home equity loans, credit cards, short-term debt like car loans — those *are* tied to it, so when it moves, they move.

Mortgage rates are more like the stock market. They're tied to mortgage-backed securities, so they move depending on where investors are putting their money — whether they're going somewhere aggressive, or somewhere safer like a mortgage bond or a 30-year note.

And because of that, everything runs on anticipation, just like the stock market. If investors think a company is going to do fabulously, they buy as many shares as they can; if they think it's going off a ledge, they pull out and move to the next thing. Mortgage-backed securities work the same way. The anticipation six weeks ago, when the Fed held steady, was that they'd raise a quarter point at the next meeting. Everybody anticipated it, everybody expected it, and that's exactly what happened — so there was no turmoil in the market to move rates. Mortgage rates have stayed quite flat.

There will be announcements that could shake things up: unemployment data coming, CPI inflation data coming. Rates could go down, they could go up. But they've pretty much leveled off and found a sweet spot where I think they'll stay for some time.

### Where rates are, and what "high" actually means

Right now we're hovering around the 7% range, seven and a quarter. You can bring that down if you want to pay points and buy the rate down, or if you're purchasing and you ask the seller to help with closing costs so you can buy the rate down — you can definitely get into the high sixes. It's very doable.

I know those rates sound high. But they're actually very good. They're very average, very normal if you look over history — they're close to the average of what we've seen over the last 30 years. It only sounds extreme because rates were low for so long.

### Budget the payment for 24 months

We've had quite a few clients through the office over the last month or so who plan to buy today at this rate, accept a payment higher than they wanted, and count on rates coming down before the end of the year so they can refinance right away into something lower. I have to stop those clients.

What you're signing on the dotted line for has to be something you can afford for at least the next year to year and a half. You heard in the piece I read that they don't expect inflation numbers to be where they need to be until 2025 — and they don't say *when* in 2025\. January? June? December? We're in August of 2023, so even reaching January 2025 is 17 months out before they'd be in a position to start bringing rates down.

I do think we'll see one more hike, probably in September, and then I think they hold steady — and like 2018, when it was seven months, this could run 15 to 18 months or longer. It depends on the economy: whether we keep growing, whether we add jobs, whether unemployment stays stable. If something changes dramatically we might see them cut sooner. But it is better to anticipate that the payment you're getting into is one you can handle for a good period of time. Budget for it for **24 months**. If we can refinance you in twelve, fantastic. But know that this is a payment you're going to be making for a while.

A lot of people are hearing that things are getting better and assuming we'll see it turn by the end of the year. I just don't think mortgage rates are going to come down fast. It's going to be very slow. When we know the Fed is holding and done hiking, that's when rates start to come down — slowly.

### When a refinance actually makes sense

There are plenty of reasons to refinance: paying off debt, consolidating a home equity line into a first mortgage, doing home improvements. Those three have nothing to do with what I'm talking about today — they can make sense at any point. What I'm talking about is a *rate-and-term* refinance, where you take the balance you have and rewrite the note to lower the rate and save money monthly.

So when is the right time? Generally not until the rate has dropped at least a half percent below what you have today. It depends on your balance. If you have a million, a million and a half, two million dollar mortgage, a quarter point reduction might be worth it, because the monthly savings on that balance doesn't require as big a drop. But at an average loan amount — $500,000, $700,000, $800,000, and the average sale price is about $450,000 nationally and about $700,000 in Southern California — you really need about a half percent for it to make sense against the cost.

Which brings up what a refinance costs. When rates start to come down you're going to hear a lot of companies advertising no-fee refinances. Every refinance has a cost. In a no-fee refinance, they give you a higher rate than the lowest available, and use the rebate they earn on that higher rate to pay the costs. Or you take the lowest rate and pay the costs yourself — and those don't have to come out of pocket, you can roll them into the new loan.

Either way, make sure the rate and payment drop enough that you recoup the cost within about two to three years, 24 to 36 months. Every payment after that is savings. If rates come down slowly and it takes 12 to 15 months to reach a level that makes refinancing beneficial, I just want the expectations set properly. Don't get into something you can't afford.

### Is it a good time to buy?

At the beginning of the show I read that very reliable sources said there was a 100% chance of recession in 2023\. If I were a first-time buyer who'd never owned a home and I heard that, I'd have parked myself on the sidelines waiting for the volcano to erupt, waiting for values to drop so I could strike at the right time. Unfortunately that never came to play. The economy stayed resilient even through the rate hikes. Unemployment stayed resilient. New jobs stayed resilient. Inflation is coming down even with the hikes.

I have no crystal ball and I can't tell you anything as absolute fact, but it does not appear that's going to happen. Home values did lose about 10% between the middle of 2022 and the end of the first quarter of 2023 — and they've already started going back up. Call any real estate agent you know and ask how their searches are going with new buyers. There are multiple offers on properties. Values have stayed high depending on location and price range. A single family home in Los Angeles County in the $600,000 to $700,000 range is very hard to find, and when one comes on the market it gets swarmed, with people overbidding, because there isn't enough inventory and there are buyers who need to buy.

So don't sit on the sidelines. Get prepared, get your pre-approval done, buy something affordable, and in the future we refinance and get you into a lower payment. Here's a great goal: buy something you can afford now; when rates come down, refinance and lower the payment; put a renter in that property so it cash flows; and go buy another one that's a little bigger, because you'll afford a higher sale price at the same monthly payment. Now you've started building your portfolio.

I've been saying week after week that it is never a bad time to buy — there is just a bad time to sell. Even if you buy today and the value drops, if you budgeted for the payment, that's okay. Values always come back, they always return to where they stopped the time before, and they always exceed it. That's how history has circulated. And when values drop, that's when you buy *another* property at a lower price and a lower rate, move into the nicer home, and put a tenant in the one you're living in now.

Many economists say what we saw in values dropping is what we're going to get — that we won't see a further drop. That's all speculation; nobody knows 100%. I'm giving you the information I read.

### When a 7% refinance beats a 2.5% first mortgage

I have commercials running on the radio saying that if you're a homeowner in debt, struggling with payments, or needing cash out to pay things off, there could be options — and I'm getting calls from people confused about what that means, so let me explain it properly.

Say you have credit card debt of $30,000, $40,000, $50,000\. I've had clients call with $100,000 in credit card debt. Look at the rates on those cards — they are very possibly well above 20%: 23%, 26%, 29%, 32%. We've seen it all come through the office.

Then say you also have a personal loan, because a lot of people take one to pay off their cards. Personal loans are short — three, four, five years — so the monthly payment is significantly higher than the card minimums were. In your mind it makes sense: I'm paying everything off and I'll only owe this for three years. But that payment often isn't actually affordable, because the card minimums weren't affordable either. So you start using the cards again, and now you have card debt *and* the personal loan. Some of you also have an equity line you took for an ADU or a kitchen remodel, because you didn't want to refinance and lose a 2.5% first mortgage.

Now blend all of it — the equity line rate, the credit card rates, the personal loan rate, against that low first mortgage. Many of the clients calling us are at a blended rate of seven and a half, eight, nine percent. So when we look at a refinance that pays everything off, yes, the rate is higher than what you have today, and I know that hurts. But the total monthly outlay decreases: the new mortgage payment is lower than everything you were paying separately, and the blended rate you were actually paying was higher than the new one.

If that's your position, at least find out. We give you the information, we show you the math, and you make the decision. We're not going to hound you afterward.

### Wrap-up

Call the office at 844-935-3634 — that's 844-WE-LEND-4 — or go to mortgagemomradio.com to send an email or book a free phone consultation right on the calendar. You'll talk to me, Carrie, Heather or Heidi, and it's just a conversation: where's your credit, do you have money saved, what's your income, how are you paid. Nothing intimidating.

To watch live and ask questions in real time, text the word MOM to that same number and you'll get one link a week. We stream to YouTube, Facebook, Instagram and Twitch at the same time. I do the show live on Wednesdays at one o'clock — today is Thursday because I'm a day off after a two-week move. I'll be back next Wednesday at one o'clock doing it all over again about something new. Have a fantastic rest of your week. Bye-bye.

Debbie Marcoux is licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, NMLS ID #237926, and additionally licensed in AZ (0941504), FL, GA, HI, ID, IL, NV, NC, OR, TN, TX, and WA. Rates and figures discussed were current as of the air date of August 3, 2023, reflect national conforming averages, and are not an offer of credit or a rate quote. Debbie Marcoux is not a financial advisor; consult qualified professionals about your individual situation.