Fed Hikes to 3.75%–4%, US Mortgage Rates Top 7%: What It Means for Caribbean Buyers

The Federal Reserve raised its benchmark rate on September 16, and US mortgage rates followed. The Fed lifted the federal funds target range by a quarter point to 3.75%–4.00%, its first increase since 2023. A week later, Freddie Mac's average 30-year fixed rate crossed 7% for the first time in more than a year.

For US buyers of Caribbean property, the question is practical: does borrowing at home still make sense, or is this a cash market again?

What happened

• Fed decision, September 16, 2026: the target range went up 0.25 point to 3.75%–4.00%, from 3.50%–3.75%. The vote was unanimous, 12–0. The FOMC statement said inflation "remains elevated" and that the move will support "a timelier return" to the 2% goal.

• What markets expect next: after the meeting, futures pricing (CME FedWatch) pointed to another quarter-point hike in December.

• Mortgage rates, week of September 24: the 30-year fixed averaged 7.03%, up from 6.95% the week before and 6.30% a year earlier. The 15-year averaged 6.42% (Freddie Mac PMMS).

• Existing-home sales, August (released September 10): 3.98 million at an annual rate, down 2.0% from July and 1.2% from a year earlier. The median price was $429,100, up 1.6% year over year. Inventory stood at 1.62 million homes, or 4.9 months of supply. All-cash deals were 27% of sales (NAR).

NAR chief economist Lawrence Yun put it plainly: "Mortgage rates and home sales move in opposite directions." He added that the ample supply of homes for sale is giving buyers better room to negotiate.

Why it matters for US mortgage rates and Caribbean buyers

Three things change for an American buyer when rates move like this.

1. Money borrowed at home costs more. Many of our US clients fund an island purchase with a home equity line, a cash-out refinance or a portfolio loan. Those costs track US rates. A higher policy rate and a 30-year above 7% raise the carrying cost of anything borrowed against a US house.

2. Selling the US home takes longer. With sales down year over year and close to five months of supply, a seller in many US markets has less leverage. If the island purchase depends on a US sale, build in time and do not count on a quick close.

3. Cash holds the stronger hand. More than a quarter of US existing-home sales already close in cash. In Sint Maarten, a cash buyer can sign, pay the deposit and close on the notary's timeline with no financing condition, and sellers notice that when they compare offers.

The currency side

On the Dutch side, the local currency is pegged to the US dollar and property is priced in dollars, so a US buyer carries no exchange-rate risk on the purchase itself. On the French side, prices are in euros, and a US buyer is exposed to the euro-dollar rate between the offer and the final deed, which can be several months. Rate decisions move currencies, but not in a straight line, and a closing should not depend on a guess. This is not financial advice: if you buy on the French side, ask your bank about fixing the exchange rate once the compromis de vente is signed.

Our read

We do not see this hike as a reason to stop looking. We see it as a reason to be exact about where the money comes from. A buyer paying from savings or investments is barely affected. A buyer borrowing against a US home should price that loan at today's rates, not last spring's, and test the numbers against one more hike.

What we are telling clients this week: settle the funding first, then shortlist. On the Dutch side, budget about 5.5% on top of the price for the 4% transfer tax, notary and registration. The deposit is usually 10%, held in escrow by the notary. If US borrowing costs trim your budget, the island still has range: a condo in Cole Bay or Point Blanche sits at a very different price point from Indigo Bay or Terres Basses.

In our experience, the best listings move before high season starts in December. Buyers who arrive with funding already arranged get the first look.

You can browse current properties for sale, or read our Buyer's Guide for the full process on both sides of the island.

Sources: Federal Reserve, FOMC statement (September 16, 2026); Advisor Perspectives, Fed decision coverage and CME FedWatch pricing (September 16, 2026); Freddie Mac, Primary Mortgage Market Survey (September 24, 2026); NPR (September 24, 2026); National Association of Realtors, Existing-Home Sales for August 2026 (September 10, 2026).

Ready to look at what is on the market? Browse our condos for sale in Sint Maarten and villas for sale in Sint Maarten, or see every property for sale.