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Fed Rate Hike Raises Monthly Mortgage Costs by $150

By Markets Desk · 2026-09-17 · 1 min read
A single-family house exterior with a front door and windows
Illustration: Tradingbird

A 0.25% increase in the Federal Reserve's target rate adds approximately $150 to monthly mortgage payments for Southern Colorado buyers. This shift reduces qualification eligibility and tightens rental supply.

Federal Reserve Chair Kevin Warsh confirmed that inflation remains above the 2% target. The central bank raised the benchmark interest rate by 0.25 percentage points. This decision prioritizes price stability over immediate housing support. Mortgage rates are expected to follow the move upward.

Jill Gaebler of the Pikes Peak Housing Network estimates the financial impact on borrowers. A shift in mortgage rates from 6.5% to 7% adds roughly $150 to monthly payments. Some prospective buyers will no longer qualify for loans. These individuals are likely to enter the rental market instead.

Rental demand faces increased pressure

The rental market in El Paso County is already strained. An influx of would-be homebuyers increases competition for available units. Gaebler notes this adds significant pressure to housing availability. Landlords may raise rents in response to higher demand.

Construction costs limit new supply

Developers rely on debt to finance construction projects. Higher borrowing costs make these loans more expensive to service. Some builders may cancel or delay projects due to financing difficulties. This results in fewer new homes entering the market.

Income growth lags price increases

The affordability gap has widened over the past decade. Regional incomes have increased by 49% according to local housing data. Home prices have risen by 111% over the same period. The Fed's focus on inflation may keep borrowing costs elevated for an extended period.

Based on reporting by KKTV, compiled by the Tradingbird desk.

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