The Federal Reserve and federal funds rate impact Americans’ wallets in multiple ways, including the mortgage rates buyers will pay on a house.

At its October 27-28 meeting, the Fed decided to hold its rate steady at 3.75% to 4.00%. This follows a 0.25% increase at its September meeting.

So, does this mean mortgage rates will also hold steady in the coming weeks? Not necessarily.

“Importantly, a Fed decision doesn’t automatically translate into an equal move in mortgage rates because markets often price policy expectations well in advance,” Ryan Hayes, head of retail sales at Chase Home Lending, in comments shared with TheStreet.

Read more: The bond market just sent home buyers an unexpected signal

When it comes to Fed decisions, mortgage rates typically increase a few weeks before a meeting if investors anticipate the central bank will hike the federal funds rate. Likewise, mortgage rates tend to decrease if investors expect the Fed will cut its rate.

So, the real question for what mortgage rates will do next becomes: What will the Fed do at its next meeting?

Mortgage rates may increase before the December Fed meeting

There is no FOMC meeting in November, so the next one occurs December 8-9.

The market expects two to three more rate hikes in the next six to eight months, reported Realtor.com. More specifically, after the Fed announcement on Oct. 28, the CME Group FedWatch tool estimated an 82.6% chance of a 0.25% rate hike at the December meeting.

Because mortgage rates typically increase before an anticipated federal funds rate hike, these sentiments will likely lead to higher mortgage rates in the near future.

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“After some recent relief from October highs, I expect mortgage rates to remain range-bound and choppy near term, reacting quickly to economic data and shifts in risk sentiment,” Hayes said. “If the data confirms a cooling trend, rates could drift modestly lower at times, but borrowers should be prepared for ongoing volatility.”

The average 30-year fixed mortgage rate spiked to 7.40% in October, according to Freddie Mac data. It eased a bit the week of Oct. 22, inching down to 7.32%.

But it’s looking more and more likely that the 30-year mortgage rate could jump right back up.

Many expect the Federal Reserve to hike the federal funds rate in December, so mortgage rates could increase beforehand.

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What could cause mortgage rates to decrease?

First of all, why do economists expect the Fed to increase the federal funds rate in December?

The Fed’s target inflation rate is 2%. The September Consumer Price Index (CPI) showed that the September inflation rate was 3.7%, higher than economists projected. So, hot inflation is a major concern for the Fed.

The economy is also relatively strong right now. This may seem like good news, but for the federal funds rate, it’s actually bad news.

One reason the Fed would hike its rate is to cool an overheating economy and slow excessive business and consumer spending.

“Economic activity is expanding at a strong pace,” Federal Reserve Chairman Kevin Warsh said at an Oct. 28 press conference.

“Productivity growth is strong, and capital investment robust,” Warsh continued. “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

Economists may be less likely to expect a December Fed funds rate hike if inflation cools or employment weakens significantly before the meeting. And because there is no November meeting, more time exists for these changes to occur.

Still, the U.S. economy is unlikely to shift drastically enough for the Fed to cut rates in December. So, mortgage rates could decrease a little bit, but probably not steadily or substantially. If anything, rates would probably be relatively stable.

Homebuyers, owners, and sellers should expect mortgage rates to stay steady or rise in the coming weeks.

Related: Goldman Sachs has a new warning for the housing market for 2027