The Federal Reserve Cut Rates, But Mortgage Rates Climbed Instead

Last week, the Federal Reserve lowered its benchmark interest rate by a quarter point. However, mortgage rates did not follow the same trend and instead edged higher. The disconnect between the two has important implications for homebuyers and homeowners.

Recent Mortgage Rate Fluctuations

The day before the Fed’s rate cut, the average 30-year fixed mortgage rate dropped to its lowest level in nearly 13 months—6.37% on Tuesday. After the Fed's announcement on Wednesday afternoon, that rate ticked up slightly and then rose another 12 basis points to 6.49% by Thursday, where it has remained stable since.

Expert Insight

“As these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.

His comment highlights a key truth: changes in the Fed's benchmark rate do not automatically determine mortgage rates.

What It Means for Borrowers

While many prospective buyers and homeowners hoped for lower borrowing costs, mortgage rates have instead increased slightly. This demonstrates that mortgage trends depend on a wider range of economic factors beyond the Federal Reserve’s actions. Understanding these factors can help consumers make better financial decisions rather than trying to time the market.

Summary

Mortgage rates rose despite the Fed’s rate cut, underscoring that housing finance costs are influenced by broader market forces and investor expectations, not just monetary policy changes.

Author’s resume: The article explains that even after the Federal Reserve lowered interest rates, mortgage rates climbed due to market anticipation and wider financial conditions.

Investopedia — 2025-11-05