This past week, the Federal Reserve made a widely expected move: they cut the federal funds rate by ¼%. If you’ve been following the news, you might have wondered why mortgage rates didn’t drop right away — in fact, they actually ticked slightly higher immediately after the announcement.
Here’s why that happened, what it means for homebuyers and homeowners, and how you can plan your next steps.
The Fed’s rate is the overnight rate that banks charge each other. Mortgage rates, on the other hand, are tied to longer-term bonds and mortgage-backed securities (MBS).
Because the Fed’s cut was expected, the bond market had already priced it in before the announcement. That’s why we saw mortgage rates improve in the days leading up to the meeting — and why they nudged slightly higher after the fact.
Markets often move in anticipation of a Fed decision and then react differently once the announcement is official.
The Fed also signaled that they may cut again later this year if inflation keeps coming down — but they stopped short of promising additional cuts. Investors took that as a cautious tone, which pushed bond yields (and mortgage rates) a bit higher.
Short-term bumps are normal. Mortgage rates can change daily, sometimes even several times a day.
Being ready matters. A fully underwritten pre-approval lets you move quickly if rates dip again.
If you bought a home earlier this year, there may be an opportunity to refinance into a better payment or a shorter term — even with the recent tick higher in rates.
Right now, we have a pricing incentive for no-cash-out refinances that expires on 10/1/2025. If you’ve been thinking about refinancing, this could be a good time to review your options before the window closes.
The next key market movers will be:
Inflation data (Sept. 26) – A softer reading could help push rates lower again.
Jobs report (Oct. 3) – If job growth cools further, it could open the door for another Fed cut later this year.
Mortgage rates didn’t drop after the Fed cut because the market had already priced it in. The bigger story is that rates have room to improve if upcoming data cooperates.
If you’re planning to buy or refinance, now is a great time to review your plan and make sure you’re ready to act the next time rates dip.
Need help planning your next move?
I can review your goals and create a custom game plan — whether that’s getting pre-approved, timing a refinance, or just running the numbers so you know where you stand.
📅 Schedule a quick call or reply to this post to get started.
Compliance Note: This post is for informational purposes only and does not constitute a commitment to lend or a guarantee of future rates. All loans subject to credit and underwriting approval. Terms and conditions may change without notice.
