Rate cuts were supposed to push mortgage rates lower. The opposite has happened.
Instead, the opposite has happened
Since Fed Chair Jerome Powell lowered interest rates by 50 basis points on September 18, the average 30-year fixed mortgage rate has moved higher, not lower.
According to data from Mortgage News Daily, the average 30-year fixed mortgage rate has jumped about 47 basis points since the Fed rate cut, to 6.62% from 6.15%.
The increase has aligned with a shift in how investors are viewing the Fed's path of future rate cuts, a pivot that started even before the September move. The 10-year Treasury yield — which is strongly correlated with mortgage rates — has also risen since the rate cut, signaling that investors feel good about the economy and are pricing in less easing going forward.
Going forward, the situation hinges on the Fed's rate-lowering schedule. At present time, market expectations — as calculated by the CME FedWatch tool — are for two more 25-basis-point cuts this year.
https://www.msn.com/en-us/money/realestate/rate-cuts-were-supposed-to-push-mortgage-rates-lower-the-opposite-has-happened/ar-AA1rU4y6?ocid=entnewsntp&pc=LCTS&cvid=9c75c5acd51a41a7b1c28a2fa0e4d987&ei=125
So the fed cut interest rates by a half point and mortgage interest rates go UP by almost half a point. Good thing they didn't cut it a full point.
- Fed easing hasn't led to lower mortgage rates, with the 30-year fixed rate actually rising since the first rate cut.
- Mortgage rates are closely linked to the 10-year US Treasury yield, which have also risen over the period.
- Friday's blockbuster jobs report reinforced these moves and extended increases.
Instead, the opposite has happened
Since Fed Chair Jerome Powell lowered interest rates by 50 basis points on September 18, the average 30-year fixed mortgage rate has moved higher, not lower.
According to data from Mortgage News Daily, the average 30-year fixed mortgage rate has jumped about 47 basis points since the Fed rate cut, to 6.62% from 6.15%.
The increase has aligned with a shift in how investors are viewing the Fed's path of future rate cuts, a pivot that started even before the September move. The 10-year Treasury yield — which is strongly correlated with mortgage rates — has also risen since the rate cut, signaling that investors feel good about the economy and are pricing in less easing going forward.
Going forward, the situation hinges on the Fed's rate-lowering schedule. At present time, market expectations — as calculated by the CME FedWatch tool — are for two more 25-basis-point cuts this year.
https://www.msn.com/en-us/money/realestate/rate-cuts-were-supposed-to-push-mortgage-rates-lower-the-opposite-has-happened/ar-AA1rU4y6?ocid=entnewsntp&pc=LCTS&cvid=9c75c5acd51a41a7b1c28a2fa0e4d987&ei=125
So the fed cut interest rates by a half point and mortgage interest rates go UP by almost half a point. Good thing they didn't cut it a full point.
statistics: Posted by Hockeygoon — 9:16 PM - 1 day ago — Replies 4 — Views 70