The Federal Reserve raised interest rates in September, its first increase since 2023, then held steady at its October meeting. If you're financing or refinancing investment property, you've probably wondered what that does to your loan. Here's what happened, what it changes and what it doesn't, why your rate depends on more than the Fed and the Treasury, and how to underwrite a deal in this environment. Figures are current as of early November 2026.
What the Fed Did
- In September, the Fed raised its benchmark rate by 0.25 percentage point.
- On October 28, it voted 10 to 2 to hold the target range at 3.75% to 4.00%, citing inflation that remains elevated.
- The next meeting is December 8 to 9, with the decision on December 9. Whether another increase comes depends on the inflation data between now and then, and no one can promise a direction.
The Fed's Rate Is Not Your Loan Rate, but It Still Matters
The Fed sets a short-term rate, the one banks charge each other for overnight borrowing. That rate influences credit cards and variable-rate products most directly. Long-term loans, including a 30-year DSCR loan, are priced off the 10-year Treasury yield, which moves on investor expectations about inflation and growth. We cover how that works in our 10-year Treasury explainer.
In 2026, the two have moved up together. The 10-year Treasury yield rose from about 4% in late February to above 5% this fall, and Freddie Mac's average 30-year mortgage rate went from about 6.8% in early September to about 7.4% in early October. We looked at that spike in Treasury Yields Just Hit a 20-Year High. The takeaway is the same: your rate follows the bond market more than the Fed. And there's a third piece that sits on top of both.
The Third Piece: The Secondary Market
Most lenders don't keep the loans they make. They sell them to investors, and what those investors are willing to pay determines the rate a lender can offer you. That market has its own supply, demand, and mood. So your rate depends on three things, not two: the Fed, the Treasury, and the secondary market where loans get sold.
How it shows up for conventional loans. A mortgage rate is roughly the 10-year Treasury yield plus a spread, and that spread reflects what investors demand to hold mortgage bonds instead of Treasuries. Over the long run it has averaged about 1.7 to 1.8 points. In 2026 it has run closer to 2 points and has moved around: about 1.9 points in February, about 2.05 in March, and wider again at times since. When investors expect more rate volatility, they ask for a bigger cushion, and that pushes mortgage rates up even if the Treasury yield holds still. In September, mortgage-backed securities sold off sharply along with Treasuries, and mortgage rates jumped with them.
How it shows up for DSCR loans. Most DSCR loans aren't sold to Fannie Mae or Freddie Mac. They're pooled into private securitizations or sold to institutional buyers such as insurance companies. That market has been strong this year, with industry forecasts putting non-QM securitization near $100 billion and DSCR loans making up roughly 30% to 40% of it. Strong demand can keep DSCR pricing from rising as fast as Treasury yields, and at least one industry executive has observed that DSCR rates haven't climbed as much as Treasuries. But the same market can reprice quickly. Lenders adjust their pricing often based on investor demand, how their securitizations are executing, loan performance, and the mix of loans in their pipeline.
None of this means the market is broken. It means the number on your quote is set by more than one lever, and some of them move on their own schedule.
What it means for you. The same loan can be quoted at different rates a week apart even when the Treasury barely moves, and two lenders can quote different rates on the same day because they sell to different buyers. Get more than one quote on a deal you care about, and treat a quote as good only for as long as it's locked. Once your rate is locked, those day-to-day moves stop affecting you for the length of the lock.
What Higher Rates Change for Investors
DSCR loans: the ratio moves
A DSCR loan qualifies on the property's rent compared with its monthly costs. When the rate goes up, the payment goes up, and the ratio falls even though the property hasn't changed. Here's a simple illustration on a $300,000, 30-year loan, with $450 a month in taxes and insurance and $2,400 in monthly rent:
| Rate | Principal and interest | Total monthly cost | DSCR |
|---|---|---|---|
| 6% | $1,799 | $2,249 | 1.07 |
| 7% | $1,996 | $2,446 | 0.98 |
Same property, same rent. A one-point rate move takes the ratio from comfortably above 1.0 to just under it. Programs differ on how much coverage they require and how they price a lower ratio, so run your actual numbers at today's rate, not last year's.
Cash-out refinances: the new payment
If you're planning to pull equity out, the new loan carries the new rate. The question is whether the equity you redeploy will earn more than the added carrying cost. That's a math problem to run on your own numbers, not a reason to rush or to wait.
Fix & flip and bridge: carry and exit
Short-term loans don't track the 10-year the way a 30-year loan does. Their pricing reflects each lender's funding costs and the risk of the deal. What higher rates change most is your exit. Buyers financing your finished flip face higher monthly payments, which can mean more time on the market or softer pricing. Build conservative resale assumptions and room for an extra month or two of carrying costs.
A deal that only works if rates fall isn't underwritten. It's a hope.
What We're Not Saying
We can't tell you where rates go next, and neither can anyone else. If inflation cools, rates could ease. If December brings another increase, they could rise. A deal that only works if rates fall isn't underwritten. It's a hope.
How to Underwrite a Deal Right Now
- Use today's rates, not the ones you remember from last year.
- Stress-test your DSCR at a rate half a point to a full point above your quote.
- Underwrite the exit conservatively on flips, with a longer hold time than you'd like.
- Compare structures, not just rates. Leverage, term, and fees all change what a deal costs.
- Decide off your numbers, not a headline.
Frequently Asked Questions
Yes. It raised its benchmark rate by 0.25 percentage point in September, the first increase since 2023, then held at 3.75% to 4.00% at its October 28 meeting.
Not directly. Long-term loans track the 10-year Treasury yield, which moves on inflation and growth expectations. In 2026 the two have risen together, but they don't move in lockstep.
Because lenders price off what investors will pay for loans in the secondary market. That demand, and the spread over Treasuries, can shift on its own, and lenders also adjust pricing based on their own pipelines and loan performance.
December 8 to 9, with the decision announced December 9.
That depends on your current rate, the equity you'd use, and what it's for. No one can promise rates will fall, so a decision based on your own numbers is stronger than one based on a forecast.
A higher rate means a higher payment, which lowers the property's DSCR. Programs differ on the ratio they require and how they price it, so it's worth running the numbers at the current rate.
Less directly than long-term loans. The bigger effect is on your exit, since buyers face higher payments.
Run Your Numbers at Today's Rates
Rate headlines change every week. What matters is whether your specific deal works. Let's run it.
Rates and terms vary by deal and are subject to change. This article is for informational purposes only, is not financial or investment advice, and is not a commitment to lend. Figures reflect public reports as of early November 2026.