?? Why Did Mortgage Rates Go Up When the Fed Just Cut Rates by 0.25%? If you’ve been following the news, you probably heard that the Federal Reserve just lowered the federal funds rate by 0.25%. Naturally, many assume mortgage rates should drop as well — but instead, we’ve seen them tick up slightly. So what gives? Here’s what’s actually happening and what it means for you as a homebuyer or homeowner. ?? 1. The Fed Doesn’t Directly Set Mortgage Rates The Federal Reserve controls the federal funds rate, which affects short-term borrowing — things like credit cards, auto loans, and home equity lines of credit. But mortgage rates are tied to long-term bonds, primarily the 10-year Treasury yield, which moves based on investor expectations for inflation, economic growth, and future Fed actions. When investors think inflation may stay higher for longer, or the economy is stronger than expected, long-term rates can rise — even as the Fed cuts short-term ones. ?? 2. Markets Often React Before the Fed Moves By the time the Fed makes a rate change, financial markets have usually priced it in. That means mortgage-backed securities (MBS), the bonds that drive home-loan rates, have already adjusted to the expectation of a 0.25% cut. If investors interpret the Fed’s comments as less dovish than expected as happened this past week—rates can jump back up right after the announcement. ?? 3. “Good News” for the Economy Can Be “Bad News” for Rates Recently, strong job numbers, resilient consumer spending, and sticky inflation data have kept pressure on bond yields. When the economy looks healthy, investors demand higher returns on long-term bonds — pushing mortgage rates up. It’s counterintuitive, but a strong economy often leads to higher mortgage rates, even after a Fed rate cut. ?? 4. What This Means for Homebuyers and Homeowners If you’ve been waiting for lower rates, don’t be discouraged. Rate movement is often bumpy before a steady downward trend. Here’s what you can do now: Get pre-qualified or re-qualified so you can move quickly when rates dip.Compare multiple lenders — a 0.125% difference can make a real impact over time.Watch for volatility — rates often dip temporarily after major data releases (like inflation or employment reports). ?? Bottom Line A Fed rate cut is only one piece of the larger mortgage-rate puzzle. Mortgage rates depend more on the bond market’s outlook for inflation and economic growth than on the Fed’s short-term target. So while today’s rates may seem frustrating, the broader trend could still favor borrowers in the months ahead — and being prepared now ensures you’re ready to take advantage when it happens.At A Home’s Best Mortgage, I help clients look beyond headlines and find the right solution — whether that’s locking in today’s rate or planning strategically for the next move.