If you’ve been keeping an eye on the market, you might’ve noticed something puzzling lately — the Federal Reserve cut rates again, but mortgage rates actually went up. Wait… what? Let’s break down what’s really going on.
The Basics: How the Fed Impacts Rates
Think of the Federal Reserve as using a gas pedal and brake for the economy.
- Raising rates slows things down when inflation runs high.
- Cutting rates helps speed things up when growth cools off.
In theory, when the Fed cuts rates, mortgage rates should follow — but that’s not always how it plays out.
What Happened in September
Back on September 17, the Fed cut its benchmark rate by a quarter point. But instead of dropping, mortgage rates ticked up. Why?
A surprise jobless claims report showed fewer people were out of work — a sign that the economy was stronger than expected. That strength made investors question whether a rate cut was even necessary, which pushed mortgage rates higher.
Then Came October
Fast forward to October 29 — another Fed rate cut, another rise in mortgage rates. This time, the cause wasn’t data, but words.
During his press conference, Fed Chair Jerome Powell hinted that the next expected rate cut in December wasn’t guaranteed. That bit of uncertainty made investors nervous, sending mortgage-backed securities down and mortgage rates up again.
What It Means for Homebuyers and Sellers
Here’s the takeaway:
While the Fed’s decisions influence the economy, they don’t directly control mortgage rates. Mortgage rates react to a mix of market expectations, economic reports, and investor confidence.
So even when the headlines say “The Fed cut rates,” it doesn’t always mean your mortgage rate will drop the same day. But don’t worry — these shifts are part of a larger trend toward market balance, and long-term rates often stabilize after initial reactions.
At The Mike Brown Group, we keep a close eye on these changes to help you make confident real estate decisions. Whether you’re thinking about buying, selling, or refinancing, understanding what’s behind the numbers helps you stay one step ahead.
