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2026-11-02

The Fed holds, rural loans can now carry a second unit, and Illinois puts $156 million into housing

US Real Estate Policy Weekly
US Real Estate Policy Weekly@Katharine Carlon
The Fed holds, rural loans can now carry a second unit, and Illinois puts $156 million into housing

The Federal Reserve held interest rates steady on Wednesday, and two officials voted against it because they wanted a hike. US Real Estate Policy Weekly.

0:00 / 3:08
The Federal Reserve met, held, and split. The Agriculture Department finished a rule it first proposed in March. Illinois opened applications for housing money the day it announced it. Three things happened this week at three different stages, and the stage is what decides whether you can act on any of them.

The Fed held, and both dissents pointed up

The target range stays at 3.75 to 4 percent after the October 27-28 meeting. The vote was 10 to 2. Governors Lisa D. Cook and Beth M. Hammack dissented, and both preferred a quarter-point increase. 1
No one voted for a cut. The two dissents pushed in the same direction, toward a higher rate, so this is a committee that has stopped raising while the members who want to move would move up. The statement's own language changed with the decision: it now says activity is expanding at a strong pace, that inflation remains elevated, and that gathering more information will help the committee settle on the right stance. 1
The mechanics did not change. The interest rate paid on reserve balances stays at 3.90 percent and the primary credit rate at 4.0 percent, both effective October 29. 2
A hold does not lower a mortgage rate. Freddie Mac's survey released October 29, the morning after the decision, put the 30-year fixed at 7.24 percent, down from 7.32 a week earlier, and the 15-year at 6.60 percent. A year ago the same survey read 6.17 and 5.41. Read the timing carefully: the survey averages applications from the prior Thursday through Wednesday, so the 7.24 figure closes on the day of the decision and says nothing about how lenders repriced after it. 3
The next meeting is December 8-9, and it comes with the Summary of Economic Projections — the first forecasts since this pause began. 4

Rural guaranteed loans can now finance an income-producing ADU

The Rural Housing Service published a final rule on October 29 for the Single Family Housing Guaranteed Loan Program, the guarantee behind Section 502(h) mortgages in rural areas. It takes effect December 28, 2026. 5
What changes:
  • The guarantee now covers the property, not just the house. A loan may finance a single-family property that includes one or several income-producing accessory dwelling units. Previously a property that produced income could be ruled out under the program's bar on property principally used for income-producing purposes. 5
  • Home-based operations are covered. A property that accommodates a home-based business using non-commercial features is eligible, though the property still has to stay principally residential. 5
  • The rent does not count toward qualifying. This is the boundary that decides who can actually use the rule. Lenders may not add projected ADU income to a borrower's ratios, because the program will not use income whose source cannot be verified or that is not stable. Four commenters asked the agency to count it; the agency declined and left the practice unchanged. 5
The agency proposed all of this on March 31, took 28 comments, 19 of them supportive, and adopted the rule without modification. 5
What it does not do is decide whether an ADU can be built on a given lot. That is a local question. This rule settles what the federal guarantee will lend against.

Illinois: $156 million moving, the zoning half still unwritten

Governor JB Pritzker and the Illinois Housing Development Authority announced $156 million for housing on October 29, $103 million of it new money in this year's budget, all of it under the state's Building Up Illinois Developments plan. 6
The first program out of the gate is Opening Doors, and it opens to borrowers rather than to developers: a 30-year fixed-rate mortgage paired with $9,000 toward a down payment or closing costs, forgiven after five years with nothing further due. Applications opened October 29, the day of the announcement, and the state expects roughly 3,000 buyers to use it. It is not limited to first-time buyers. 6
The rest runs on different clocks:
  • $36 million supplements federal Low-Income Housing Tax Credits across 22 developments in 15 counties, about 969 homes. The tax credit awards themselves were approved by the IHDA board earlier this year. 6
  • $14 million in state money seeds a $50 million Permanent Supportive Housing round that opens in November 2026 for 187 units. 6
  • $25 million relaunches SmartBuy, which pays off up to $40,000 in student loan debt for buyers, in spring 2027. 6
The announcement is also the clearest statement this week of where the limit sits. "Public investment alone cannot produce all the housing Illinois needs," the governor said, and the state has "to confront the regulations that make it harder and more expensive to build housing." 6
That is an appropriation moving and a rule change still being argued for. If you build in Illinois, the money is real now and the zoning is not settled yet.

Dates to watch

  • December 8-9, 2026 — the FOMC meets, with the Summary of Economic Projections attached. 4
  • December 14, 2026 — comments close on HUD's request for information about the Foster Youth to Independence voucher program, which HUD will use to recommend changes to Congress, including how to support participants when the subsidy ends. 7
  • December 28, 2026 — the rural ADU rule takes effect, and lenders can start writing guaranteed loans against property that includes an income-producing unit. 5

References

  1. 1
    Federal Reserve — FOMC statement, October 28, 2026

    federalreserve.gov

  2. 2
    Federal Reserve — Implementation Note, October 28, 2026

    federalreserve.gov

  3. 3
    Freddie Mac — Primary Mortgage Market Survey, week ending October 29, 2026

    freddiemac.com

  4. 4
    Federal Reserve — FOMC meeting calendar, 2026

    federalreserve.gov

  5. 5
    Federal Register — Single Family Housing Guaranteed Loan Program-Income Producing Accessory Dwelling Unit (ADU) Provisions, final rule, October 29, 2026

    federalregister.gov

  6. 6
    Office of the Governor of Illinois — Gov. Pritzker Announces $156 Million in Funding for Housing, October 29, 2026

    gov-pritzker-newsroom.prezly.com

  7. 7
    Federal Register — HUD Request for Information To Promote the Success of the Melania Trump Foster Youth to Independence (FYI) Initiative, October 30, 2026

    federalregister.gov

US Real Estate Policy Weekly
US Real Estate Policy Weekly@Katharine Carlon

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