How does the Fed decision affect mortgage rates?

The Federal Reserve sets the federal funds rate, influencing the 10-year Treasury yield, which serves as a benchmark for mortgage rates. When the Fed raises rates to curb inflation, mortgage rates typically rise; when it lowers rates to stimulate spending, mortgage rates usually fall. Borrowers should focus on controllable factors like comparing lenders and consider adjustable-rate mortgages if expecting rate declines, while fixed-rate loans offer payment stability.