The Federal Reserve Cut Rates, But Mortgage Rates Climbed Instead

A Federal Reserve rate cut made headlines last week, yet mortgage rates did not follow suit. Understanding the factors behind this divergence is crucial for buyers and homeowners.

Mortgage Rates Movement Around the Fed Rate Cut

The day before the Federal Reserve lowered interest rates, 30-year mortgage rates dropped to their lowest in nearly 13 months, reaching 6.37% on Tuesday. After the Fed’s announcement on Wednesday afternoon, mortgage rates initially rose by a few basis points and increased further by 12 points to settle at 6.49% on Thursday, maintaining that level since.

This increase occurred despite the Fed cutting its benchmark rate by a quarter point, disappointing many homebuyers and those seeking refinancing who had hoped for lower mortgage rates. Instead, rates inched higher.

Expert Insight on Mortgage Rate Trends

“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association (MBA).

This highlights that Federal Reserve decisions do not directly control mortgage rates. Those expecting mortgage rates to drop immediately after a Fed cut should understand the actual drivers behind mortgage pricing to plan effectively rather than trying to predict market timing.

Key Takeaways for Buyers and Homeowners

Mortgage rates don’t always react downward following Fed rate cuts.
Market expectations often factor in anticipated Fed moves before announcements.
Realistic planning requires grasping what influences mortgage rates beyond Fed policy.

Author’s summary: Mortgage rates can rise even after Federal Reserve rate cuts, revealing the complex market forces that buyers and homeowners must understand for effective financial planning.

Investopedia — 2025-11-04