The average 30-year fixed mortgage rate is hovering around 7.5%, CNBC reports. On Wednesday, Oct. 28, 2026, the Federal Reserve is expected to hold its benchmark rate at 3.75% to 4%, according to CBS News. Meanwhile, CNBC reports the 10-year Treasury yield is above 5%.
Why the Fed Is Likely to Stand Pat This Week
Most economists and Wall Street analysts expect the Fed to leave its benchmark rate unchanged when it releases its policy statement Wednesday at 2 p.m. ET, CBS News reported. In September, the Fed raised the federal funds rate by a quarter of a percentage point. That was its first hike in three years, and it raised borrowing costs across the economy. Thomas Ryan, senior North America economist at Capital Economics, wrote in a research note that Fed officials still appear broadly intent on tightening policy at a measured pace.
Headline inflation rose at a 3.7% annual rate in September as energy costs jumped, CBS News reported. Core inflation, which CBS News describes as excluding volatile energy categories, rose 2.6% from a year ago. Gasoline has hovered above $4 a gallon for the last three months. According to the Labor Department, it accounted for more than half of September’s increase in consumer prices.
How a 5% Treasury Yield Reaches Your Mortgage Bill
Mortgage rates track the 10-year Treasury yield, which traded at 5.1% at midday Friday, CNBC reported. That is up 114 basis points since the end of February. CNBC links the rise partly to the war with Iran, which began Feb. 28 and sent oil and diesel prices sharply higher. Bond traders then asked for more yield in case central banks raise rates. Investors also want more compensation because they expect heavy government bond issuance to continue. The housing market is slowing as a result. Pending home sales fell 4% in September, the biggest monthly drop in three years, according to Redfin.
CNBC reports the fiscal 2026 deficit at $1.99 trillion, up 12% from last year, and says AI investment is adding to the competition for capital. Traders see an 88% probability the Fed holds rates steady in October and a 71% probability it raises them in December. Those odds come from CME Group’s FedWatch tool, as cited by CBS News.
Our Math on the Deficit Behind the Yield
The Fed targets 2% annual inflation, so September’s 3.7% headline rate is 1.7 percentage points above target (3.7 minus 2). Now the deficit. CNBC puts fiscal 2026 at $1.99 trillion, up 12%. Dividing $1.99 trillion by 1.12 gives a prior-year deficit of about $1.78 trillion. That means about $210 billion more borrowing in one year ($1.99 trillion minus $1.78 trillion). This is an illustration built from CNBC’s figures, not a projection. The source gives no figure for how much this extra borrowing adds to a household’s monthly payment. What CNBC does say is that heavier debt issuance is helping push up the 10-year yield, which mortgage rates follow.
What to Check This Week
Watch the Fed’s policy statement Wednesday at 2 p.m. ET for any shift in language on further hikes. In its quarterly projections last month, the Fed signaled it expected to raise rates later this year, CBS News reported. Most economists and investors expect one more hike, likely at the Dec. 8-9 meeting. Also watch whether the 10-year yield holds above 5%, since mortgage rates track it. Disclaimer: This analysis is for educational and informational purposes only and should not be construed as financial or investment advice.
Next in the Brief: If the Fed does raise rates again in December, what happens to credit card and auto loan payments?
