Fed cut rates — so why did mortgage rates worsen right after the announcement?
What the Fed actually did
The Fed lowered the federal-funds rate by 0.25% (now targeting 3.75%–4.00%) and ended balance-sheet runoff (QT). That’s the overnight rate banks charge each other — not a mortgage rate. Federal Reserve+1
In the press conference, Chair Jerome Powell emphasized that a December cut is “not a foregone conclusion,” citing still-elevated inflation and a cooling (but not weak) labor market. Markets heard that as more cautious/“hawkish” than expected. Reuters+1
Why mortgage rates can rise after a Fed cut
Mortgage rates don’t follow the Fed’s overnight rate. They’re driven mostly by long-term bond markets — especially the 10-year Treasury and mortgage-backed securities (MBS). When investors sell those bonds, yields rise and mortgage pricing worsens, even if the Fed is cutting. CBS News+2Kiplinger+2
That’s exactly what happened yesterday:
After Powell’s Q&A, traders dialed back expectations for more cuts; Treasury yields jumped (the 10-year rose ~7–8 bps into the close), and stocks faded. MarketWatch
Industry desks reported MBS losses (~3/8 of a point) and a wave of negative lender reprices during the afternoon. Translation: many lenders’ rates ticked higher vs. their morning sheets. Mortgage News Daily
Bottom line: the message (forward guidance), not just the move, drives mortgages. Yesterday’s guidance sounded less eager to cut again soon — so bond markets pushed back, and mortgage pricing worsened intraday. Reuters
“Wait, I just saw Freddie Mac say rates are down?”
Both things can be true depending on timeframe:
Weekly average: Freddie Mac’s Primary Mortgage Market Survey for the week ending Thu, Oct. 30 shows the 30-year fixed at 6.17%, the lowest in ~13 months — because rates had been sliding for weeks before the Fed day. Freddie Mac+1
Intraday reality: On Fed day afternoon (Oct. 29), many lenders repriced worse versus the morning due to the bond selloff — even though the broader weekly average still printed lower. Mortgage News Daily+1
If you felt like rates “went up after the cut,” you’re talking about the immediate reaction (hours), not the weekly trend (days).
The 3-part cause of the hiccup
Expectations reset: Powell said December is not guaranteed. Fewer near-term cuts → higher long-run yields → worse mortgage pricing that afternoon. MarketWatch+1
Risk & uncertainty: With data gaps and mixed inflation signals, markets demanded a bit more yield to hold long bonds. The Journal Record
MBS mechanics: When MBS prices drop quickly, lenders protect pipelines by repricing — that shows up to consumers as a higher rate on the sa
What this means if you’re house-hunting (or refinancing)
Don’t overreact to a single afternoon. The weekly trend still shows easing from mid-year peaks (Freddie Mac 6.17% avg this week), but day-to-day swings are normal around Fed events. Freddie Mac+1
Float-down and re-locks matter. If you’re in contract, the right lock strategy (with a float-down option where available) can capture dips while shielding you from Fed-day bumps. (Mechanics vary by lender; ask us.)
Payment sensitivity is smaller than you think. On a typical $400k loan, a 0.25% rate move is roughly $50/month in principal & interest — meaningful, but rarely deal-breaking versus long-term equity and rent inflation. (We’ll run your exact figures.)
Focus on the spread. Over time, the gap between mortgage rates and the 10-year Treasury tends to widen in volatile periods and tighten as markets calm — another way rates can improve even without big new Fed cuts. Wall Street Journal
Quick FAQ
Did the Fed “make” mortgage rates go up?
Not directly. The Fed sets an overnight rate; mortgages price off long bonds & MBS. Yesterday’s hawkish tone nudged those markets to higher yields, so lenders repriced. CBS News+1
So… are mortgage rates falling or rising?
Both, depending on timing: the weekly average hit 6.17% (down), but intraday on Oct. 29 many lenders moved higher after the press conference. Freddie Mac+1
What would send mortgage rates decisively lower from here?
Softer inflation and growth data, and
Calmer markets that attract more buyers into MBS (narrowing the mortgage-Treasury spread). Wall Street Journal
My take (and how I can help)
I’ve been doing this a long time, and days like yesterday are exactly why having a plan matters. We’ll watch the bond market for you, structure the right lock/float strategy, and keep you posted when opportunities open up — so you’re not chasing headlines in the middle of your workday.
If you want me to run your numbers with today’s pricing — or compare lock options on an active file — shoot me a message and I’ll tailor it to your goals.
— Ed Stojancevich
SouthShore Region Mortgage Group
219.301.1220
Sources & references (as of Oct. 30, 2025)
Fed press conference transcript; 0.25% cut and policy context. Federal Reserve
News coverage of the 25 bp cut (target range 3.75–4.00%). CBS News
Powell’s guidance that a December cut isn’t assured; immediate market reaction. Reuters+1
Intraday bond/MBS move and lender reprices after the press conference. Mortgage News Daily
Mortgage weekly average at 6.17% (Freddie Mac PMMS, week ending Oct. 30, 2025). Freddie Mac+1
Why mortgages track the 10-year Treasury more than the Fed funds rate. CBS News+1
AP recap noting Treasury yield jump alongside the cut. AP News
