Why did mortgage rates go up even though the Fed cut rates?

Why Did Mortgage Rates Go Up After the Fed Cut?

If you’ve been following the news, you might be wondering:
“The Federal Reserve just cut rates — so why are mortgage rates rising?”
It seems backward, but there’s a good reason for it. Let’s break it down in simple terms.

🏦 The Fed Doesn’t Directly Set Mortgage Rates

When the Federal Reserve “cuts rates,” they’re adjusting the federal funds rate, which affects short-term borrowing—things like credit cards, auto loans, and home equity lines.

Mortgage rates, however, are based on long-term bond yields, especially the 10-year U.S. Treasury. These yields move with investor expectations about the economy, inflation, and future Fed policy, not the Fed’s rate directly.

📈 Why Mortgage Rates Can Rise After a Fed Cut

Even though the Fed’s goal is to make borrowing cheaper, several market forces can push mortgage rates in the opposite direction:

1. Inflation Concerns – If investors think lower rates could fuel inflation, they’ll demand higher yields on bonds, which drives mortgage rates up.

2. Economic Optimism – A rate cut can signal that the economy is still strong enough to avoid recession. When investors feel confident, they shift money out of bonds, pushing yields—and mortgage rates—higher.

3. “Priced In” Expectations – The mortgage market often anticipates Fed moves. If a cut was expected, it’s already baked into rates, so there’s little room for them to drop further.

4. Government Debt Supply – When the Treasury issues large amounts of new debt, bond yields can rise simply because of higher supply.

💡 The Big Picture

In short, the Fed controls short-term rates, but mortgage rates depend on long-term investor sentiment.
If the market thinks inflation will stay sticky or growth will remain strong, mortgage rates may stay elevated even after the Fed cuts.

So, while a Fed cut can help in some areas of the economy, it doesn’t always translate to immediate savings for homebuyers.

🏠 What This Means for You

Whether you’re buying a new home or refinancing, don’t rely solely on the Fed’s moves. Mortgage rates fluctuate daily and depend on market trends.
Working with a knowledgeable loan advisor can help you lock in the right opportunity at the right time.

Powered by Vision One Mortgage | NMLS#7861
Helping you make sense of the market — and find the mortgage that fits.

Suggested Hashtags:
#MortgageRates #FedCut #RealEstateTips #HomeLoans #VisionOneMortgage #MarketUpdate #MortgageNews #MortgageEducation #Refinance #HomeBuying