Why Mortgage Rates Don’t Always Follow the Fed
- Michael Belfor
- 22 hours ago
- 1 min read
With another Fed meeting around the corner, there’s chatter everywhere: “If the Fed cuts rates, won’t mortgage rates drop too?”
The answer: not always.
Mortgage rates are driven mainly by the 10-Year Treasury yield and mortgage-backed securities (MBS) — not directly by the Fed Funds rate.
When the Fed cuts, short-term credit like credit cards and HELOCs often move lower right away. But mortgages respond to investor expectations around inflation, growth, and bond demand.
That’s why we sometimes see mortgage rates rise even when the Fed cuts, or stay flat even after a big announcement.
For buyers and homeowners, the takeaway is simple: don’t wait on a Fed headline.
Focus on your personal numbers, your comfort with the monthly payment, and your readiness to move when the bond market gives us an opportunity.
The Fed sets the tone. Bonds set the rates. And your preparation sets the outcome.