In the US, mortgage rates jumped after the Fed cut its rate
Although the Federal Reserve lowered its benchmark interest rate this week, mortgage rates in the US reacted in the exact opposite way, CNBC reports, writes UNN.
Details
According to Mortgage News Daily, the average rate on a 30-year fixed mortgage has jumped 20 basis points since Fed Chairman Jerome Powell announced the rate cut on Wednesday and held a press conference.
This also happened the last time the Fed cut rates, and the reason is quite simple: the bond market had already priced in a rate cut, but it didn’t like Powell’s comments, the publication writes.
On Tuesday, the average 30-year fixed rate fell to 6.13%, matching the recent low of September 16, the day before the Fed announced its latest rate cut, and the lowest in a year.
This week, after the Fed announced the rate cut and Powell answered questions at a press conference, the rate jumped 14 basis points on Wednesday and another 6 basis points on Thursday, to 6.33%, 20 basis points higher than on Tuesday. The last time in September, the 30-year fixed mortgage rate rose even further, to 6.37%.
“The market’s enthusiasm for three Fed rate cuts in 2025 proved to be too much for the Fed,” Matthew Graham, chief operating officer of Mortgage News Daily, said in a client note. “The market was almost 100% certain of another rate cut in December. The Fed was not so sure, and Powell specifically stated that. The result was a small recovery in yields to levels that are more consistent with a December rate cut being a real possibility, but not a full guarantee.”
The recent rate cuts have led to a surge in refinancing applications: according to the Mortgage Bankers Association, the number of refinancing applications has increased by 111% in the last week compared to the same period last year. However, it is noted that the rate cuts have not had much impact on potential home buyers.
US mortgage rates fall to 3-year low17.09.25, 08:21 • 4325 views
