The Rate Update with Dan Frio
Wednesday, September 30, 2026 · Dan Frio · Licensed Mortgage Loan Officer · NMLS #246527
After six straight weeks of rising mortgage rates, we finally got a piece of good news this morning. The Federal Reserve's favorite inflation measure came in noticeably cooler than expected, and the bond market that drives mortgage pricing is bouncing off this week's lows. Rates haven't dropped yet, but for the first time in a while, the pressure is easing instead of building.
Inflation came in lighter than expected. The August PCE report showed core inflation (which strips out food and energy) at 3.0% over the past year. Economists expected 3.3%. The headline number was 3.4%, below the 3.7% forecast. Both are still well above the Fed's 2% goal, but the direction helps.
Fed rate-hike expectations moved back. After this report and comments from New York Fed President John Williams, markets now expect the Fed's next increase in December rather than October.
Buyers have been stepping back. Mortgage applications fell 6% last week to their lowest level in two years, according to the Mortgage Bankers Association.
Mortgage bonds are up this morning and the 10-year Treasury yield has eased back to about 5.24% after touching its highest level since 2007. Published rates below were set at 9:30 AM ET and still reflect earlier-week losses, so there is room for pricing to improve if today's bond rally holds.
| Loan Program | Today | vs. Last Week |
|---|---|---|
| 30-Year Conventional | 7.580% | +0.41% |
| 30-Year FHA | 7.240% | +0.44% |
| 30-Year VA | 7.250% | +0.43% |
| 30-Year Jumbo | 7.600% | +0.25% |
| 7/6 ARM | 6.870% | +0.15% |
| 15-Year Conventional | 7.200% | +0.37% |
Today: Inflation (PCE), second-quarter GDP (revised up to 2.2%) and the ADP jobs report (+90,000) are already out. The Chicago PMI follows at 9:45 AM ET, and Chicago Fed President Austan Goolsbee speaks at 4:00 PM.
Thursday: Weekly jobless claims at 8:30 AM and the ISM manufacturing report at 10:00 AM.
Friday: The September jobs report at 8:30 AM. This is the big one. A cooler number could build on today's relief; a hot one could undo it quickly.
Today is the first good news for rates in weeks. Inflation came in cooler than expected, and the bonds behind mortgage rates are recovering. Rates are still around 7.58% on a 30-year loan, so this is more about the climb pausing than a big drop. If you're under contract or close to it, talk with your loan officer about timing your lock around Friday's jobs report.
Mortgage applications just hit a two-year low, which lines up with what many of you are seeing in showings. Today's softer inflation gives you a real reason to reach back out to buyers who went quiet. A quick call with an updated payment estimate can go a long way this week, especially before Friday's data.
Core PCE at 3.0% versus 3.3% expected gave bonds a lift. UMBS 5.5 is up 17 ticks at 95.70 and the 10-year is near 5.24%. This morning's rate sheets still carry the earlier-week selloff, so keep an eye out for a positive reprice. Markets now expect the Fed's next hike in December, and Friday's payrolls number is the next real test.
Market data and published rates reflect a snapshot taken the morning of September 30, 2026 (approximately 9:30 AM ET) and may have changed since. Rates shown are published market estimates for educational purposes only. They are not a loan offer, commitment to lend, or financial advice. Your actual rate depends on credit, loan amount, property, and other factors. Dan Frio, NMLS #246527, PBT Bancorp NMLS #257781.
