The Fed Raised Interest Rates in September 2026: Here's What It Means for Westside LA Real Estate
The Federal Reserve raised interest rates for the first time since 2023, and it's already reshaping how buyers and sellers should think about the Westside Los Angeles market heading into the fourth quarter of 2026. On September 16, the FOMC voted 12-0 to raise the federal funds rate 25 basis points to a target range of 3.75%-4%, reversing a year of expectations that the Fed's next move would be a cut, not a hike.
For homeowners in Mar Vista, Brentwood, Venice, Marina del Rey, Pacific Palisades, and Santa Monica, this move affects financing at every price point, including the $3M-plus jumbo purchases that make up most of what transacts on the Westside.
Why Did the Fed Raise Interest Rates in September 2026?
Fed Chair Kevin Warsh cited persistent inflation, rising oil prices, and a labor market still strong enough to give the central bank room to act. The Fed's updated projections signal a possibility of another rate increase before the end of 2026, with the next FOMC decision scheduled for October 27-28. This marks a reversal from the rate-cut expectations that had dominated forecasts through most of the year.
How Did Mortgage Rates React to the September 2026 Fed Rate Hike?
Mortgage rates moved higher within 24 hours of the Fed's decision. The 10-year Treasury yield, which mortgage rates track more closely than the federal funds rate itself, pushed up near 5%. The 30-year fixed mortgage rate jumped to its highest level in about 20 months, with several lenders quoting borrowers above 7%, up from the low 6% range just a year earlier.
What Does the Fed Rate Hike Mean for Westside LA Home Buyers?
For buyers in Mar Vista, Brentwood, and Pacific Palisades using jumbo financing, this rate hike increases the cost of borrowing on any purchase above the conforming loan limit. But higher rates haven't eliminated competition for well-priced Westside inventory, buyers who stay in the market rather than waiting for a lower number are still transacting. Adjustable-rate structures, including 7/6 and 10/6 ARMs, are becoming more attractive again on jumbo loans as the spread between ARM and 30-year fixed pricing widens.
The practical move for buyers right now is locking in terms today with a plan to refinance later if the Fed succeeds in bringing inflation, and rates, down in 2027.
What Does the Fed Rate Hike Mean for Westside LA Home Sellers?
Sellers who've been waiting for a rate cut before listing need a new plan. The Fed's signal this week is that "higher for longer" is back on the table, not off it, and the October 27-28 meeting is the next checkpoint on whether this becomes a trend rather than a single move. Pricing to today's buyer pool, not to a rate environment that may not arrive, is the more reliable strategy for sellers in Mar Vista, Venice, Marina del Rey, and the Palisades this quarter.
Will Mortgage Rates Keep Rising in Los Angeles?
That depends on the Fed's next moves and inflation data between now and October 27-28. Zillow's chief economist has pointed out that a Fed finally acting on inflation is more likely to bring rates meaningfully lower in 2027 than a Fed that keeps holding rates steady without addressing the underlying problem. Short-term pain from this hike doesn't necessarily signal long-term instability in the housing market.
Frequently Asked Questions
Did the Fed raise interest rates in September 2026?
Yes. On September 16, 2026, the Federal Reserve raised the federal funds rate by 25 basis points to a target range of 3.75%-4%, the first increase since 2023.
How much did mortgage rates go up after the Fed's September 2026 rate hike?
Mortgage rates rose to their highest level in about 20 months following the hike, with several lenders quoting 30-year fixed rates above 7%, up from the low 6% range a year earlier.
How does the Fed rate hike affect Westside LA real estate?
It raises borrowing costs on jumbo loans used for most $3M-plus purchases in Mar Vista, Brentwood, Venice, Marina del Rey, and Pacific Palisades, meaning both buyers and sellers should plan around a higher-for-longer rate environment rather than waiting for rates to drop before acting.
When is the next Federal Reserve interest rate decision?
The next FOMC meeting is scheduled for October 27-28, 2026.
Connect Woth Us!
Wondering what this rate hike means for your Westside home purchase or sale? Contact the Paul Salazar Group at 310-853-2643 or at info@paulsalazargroup.com.
