The Federal Reserve Cut Rates, But Mortgage Rates Climbed Instead—Here’s What You Need to Know
The Federal Reserve’s recent interest rate cut drew national attention, but mortgage rates did not follow the same downward trend. Instead, they moved slightly higher, leaving many prospective buyers and homeowners puzzled.
Rate Trends Before and After the Fed’s Move
Before the Federal Reserve announced its rate cut last week, the average 30-year fixed mortgage rate had dropped to its lowest level in nearly 13 months—6.37% on Tuesday. However, after the Fed announcement on Wednesday afternoon, the average rate ticked up a few basis points and rose another 12 points to 6.49% on Thursday, where it has since remained.
Market Expectations Shape Mortgage Rates
Though the Fed lowered its benchmark rate by a quarter point, this change did not immediately benefit mortgage borrowers. The divergence highlights how mortgage rates often respond to broader economic forces and investor sentiment rather than following the Federal Reserve’s actions directly.
“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA).
What This Means for Borrowers
Those waiting for mortgage rates to decline right after a Fed cut may need to readjust their expectations. Understanding the separate dynamics between Fed policy and mortgage markets can help homebuyers plan better and avoid relying on rate-cut timing to make major financial decisions.
Practical Insight
- Mortgage rates depend on market conditions and investor outlook, not just Fed moves.
- Economic forecasts and inflation trends continue to play a major role in rate shifts.
Author’s Summary: The Fed’s rate cut didn’t lower mortgage costs as many hoped—market expectations had already priced it in, keeping rates steady or slightly higher.