The Fed Lowered Rates Why Did Mortgage Rates Go UP?

I’ve Mentioned This Before, and I’m Saying It Again: Don’t Keep Pushing for More Fed Rate Cuts If You’re Hoping for Lower Mortgage Rates.

Here’s a clear explanation to share with your clients:

1. Fed rate cuts can spark concerns in the markets about potential inflation picking up again.

2. That worry often leads to higher inflation expectations baked into bond yields—which essentially pushes longer-term rates upward.

So, what should the mortgage and housing sector actually want from the Fed to help bring mortgage rates down?

It’s straightforward: Maintain a mildly restrictive policy stance a bit longer, until there’s undeniable evidence of steady, sustainable progress toward the 2% inflation goal, silencing the remaining inflation concerns.

We don’t have to hit exactly 2% by next year; we simply need services and goods prices to keep easing gradually toward around 2.4% or so in the coming 6-9 months.

Feel free to pass this along to your borrowers when they call today or tomorrow wondering why mortgage rates didn’t drop after yesterday’s Fed move. Hope this is useful—let me know your take!