The Federal Reserve Cut Rates, But Mortgage Rates Climbed Instead
Last week, the Federal Reserve cut its benchmark interest rate by a quarter point, grabbing headlines. However, mortgage rates didn’t follow suit and instead rose slightly, highlighting that these two rates don’t always move together.
Mortgage Rate Trends Around the Fed Action
The day before the Fed’s rate cut, 30-year mortgage rates hit their lowest point in nearly 13 months at 6.37% on Tuesday. Following the Fed’s announcement Wednesday afternoon, the average mortgage rate initially inched up a few basis points, then surged another 0.12% to 6.49% on Thursday, where it has remained stable.
Why Mortgage Rates Didn’t Fall
Many prospective homebuyers and homeowners hoping to refinance anticipated lower mortgage rates after the Fed’s decision, but Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA), was unsurprised by the increase. He explained:
“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result.”
What This Means for Buyers and Homeowners
This situation serves as a reminder that mortgage rates are influenced by broader market dynamics and are not directly controlled by the Federal Reserve’s rate decisions. Buyers and homeowners should understand the real factors behind mortgage rate changes to plan more realistically, instead of trying to time their moves based solely on Fed announcements.
We continuously update mortgage rate reports on new purchases and refinances every business day to help navigate this changing landscape.
Summary: Although the Federal Reserve cut interest rates recently, mortgage rates rose, emphasizing that Fed decisions do not automatically lower mortgage rates due to other market forces at play.