Mortgage Market Update: Why Rates Bounced After the Fed Cut

✅ The Fed cut its benchmark rate

This is the short-term rate banks use to lend to each other. It affects things like:

• credit cards,

• auto loans,

• and some home equity products.

It does not directly set mortgage rates.

🏦 Mortgage rates follow the bond market

Mortgage pricing responds to the expectations in the Treasury and mortgage-backed security (MBS) markets. When investors believe inflation may remain sticky or that fewer future rate cuts are likely, mortgage rates can rise—even on the same day the Fed cuts.

This week, comments from the Fed suggested that another rate cut in December is not guaranteed. That shift in expectations caused investors to reprice, pushing mortgage rates slightly higher.

💭 Why this happens

The mortgage market cares more about…

• Inflation trends

• Long-term economic expectations

• Investor confidence

…than the actual Fed rate itself.

Think of the Fed cut as one piece of the picture, not the steering wheel.

📉 The Fed also paused balance sheet reductions

The Fed announced it will stop shrinking its holdings of bonds and will reinvest maturing securities. Over time, this can help support liquidity in the mortgage market, which may help rate stability in the future.

But again, investor expectations still rule in the short term.

🔍 What this means if you’re shopping for a home

Don’t be alarmed by daily bumps. Mortgage rates can move up or down multiple times per day during major news cycles. If you’re actively home-shopping:

• Focus on your monthly payment goals

• Stay flexible on timing

• Consider options that help with affordability (like seller credits)

Short-term noise doesn’t change long-term opportunity.

🏡 What this means if you’re thinking of refinancing

Because the Fed signaled caution about future cuts, rate improvements may come in windows, not a straight line. Many homeowners are choosing to:

• Monitor the market

• Improve credit positioning

• Get paperwork ready

• Wait for opportunities to lock

🧭 Bottom line

The Fed cut rates this week,
but mortgage rates moved higher due to how investors interpreted future policy guidance.

This is normal around big economic announcements—and volatility usually settles within a few days.

If you’d like to:

• Review your budget,

• Explore payment-focused strategies,

• Or plan ahead for a refinance later,

I’m happy to help you run the numbers.

Have questions? Let’s talk about your situation and goals—no pressure, no obligation.