Why Mortgage Rates Are Still High After the Big Fed Cut

By Michael Durr

"Mike is a total pleasure to work with! Great lender who explains everything thoroughly and gets you into a product that works well for you. Highly recommended!!" - Tyler Tomek

Why did interest rates go up after the Fed cut rates? Many people have reached out to me with questions about this. Let me explain why the interest rates increased despite the rate cut and what this means if you plan on entering the market.

The Federal Reserve sets the short-term interest rates in the United States. When the Fed lowers interest rates, it normally does so to stimulate the economy by making borrowing cheaper. However, the recent Fed rate drop unexpectedly raised mortgage rates.

One reason this happened is that the market had already anticipated the Fed’s rate drop. In fact, rates were already declining weeks before the announcement. This means the market had already adjusted its price according to the expected rate cut.

When the Fed finally announced the rate adjustment, mortgage rates went up instead of interest rates continuing their decline. This was because of several factors. The first one is volatility or fluctuations in the bond market. Next is due to some changes in China’s borrowing practices, which slightly impacted the market.

Although the recent rate increase caught many of us off guard, the overall trend is still downward. We expect mortgage rates to continue to drop slowly over the rest of the year. How does this situation affect your real estate plans? If you’re considering buying a home or refinancing, this recent scenario does not have a big impact on your plans. The long-term trend is still favorable for borrowers.

If you have more questions about interest rates or the housing market, feel free to reach out to me at (281) 348-9899 or mike@mortgageguys.pro. Let’s talk about your next best move.