The Federal Reserve Cut Rates, But Mortgage Rates Climbed Instead
Last week, the Federal Reserve cut its benchmark interest rate by a quarter point, yet mortgage rates did not follow suit as many expected. Instead, mortgage rates rose slightly after the Fed’s announcement.
Mortgage Rate Movements Around the Fed Cut
The day before the Federal Reserve’s decision, the 30-year mortgage rate dropped to 6.37%, its lowest in nearly 13 months. However, after the Fed’s Wednesday announcement, the average mortgage rate initially rose a few basis points and then jumped to 6.49% on Thursday, where it has remained steady.
Why Mortgage Rates Didn’t Fall
Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), explained that this reaction was expected. He said,
“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result.”
This highlights that the Federal Reserve’s rate adjustments do not directly determine mortgage rates.
What Buyers and Homeowners Should Know
While many hoping for lower mortgage rates after the Fed cut were disappointed, understanding the factors that truly influence mortgage rates helps buyers and homeowners plan realistically rather than trying to predict exact timing.
We provide daily updates on new purchase and refinance mortgage rates to keep consumers informed.
Author’s summary: Despite the Federal Reserve's rate cut, mortgage rates rose, underscoring that Fed policy shifts don’t automatically lead to cheaper home loans.