The Fed trimmed the overnight rate by 0.25%, bringing it near 4.1%, but the 30-year mortgage rate (around 6.3% on our chart) nudged higher. That’s because mortgages follow long-term bond yields—especially the 10-year Treasury—and the extra yield investors demand for mortgage-backed securities (the “MBS spread”), not the Fed’s short-term rate. After the meeting, markets priced stickier inflation/slower future cuts, heavier Treasury supply, and a wider MBS spread—all of which pushed mortgage pricing up.
Rule of thumb:
30-yr fixed ≈ 10-yr Treasury yield + MBS spread. If either rises, mortgage rates can rise—even after a Fed cut.
What to watch next
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Upcoming inflation (CPI/PCE) and jobs reports
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Fed guidance on the pace/endpoint of cuts
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Treasury issuance/QT that affects long-term yields
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MBS demand/spreads (investor appetite for mortgage bonds)
Bottom line: Rates move on the outlook, not the headline. Expect some bumpiness; if inflation cools and spreads ease, mortgage rates should follow lower.
