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You’ve probably heard it everywhere: “I’m just waiting for rates to come down before I buy.”
But here’s the truth — even though the Federal Reserve has started cutting interest rates, mortgage rates have actually gone up, not down.
That might sound backward, but it’s not unusual. And it’s precisely why savvy buyers — the ones paying attention — are making offers now, while others sit on the sidelines waiting for a “mortgage rate miracle” that may not arrive anytime soon.
Why Mortgage Rates Aren’t Falling (Even Though the Fed Is Cutting)
1. The Fed Doesn’t Set Mortgage Rates
When the Fed cuts rates, it’s adjusting the short-term rate banks charge each other for overnight loans — not mortgage rates.
Mortgage rates are long-term, and they move based on what investors think will happen with inflation and economic growth over the next decade.
Even if the Fed lowers its rate, mortgage rates can still rise if the market expects inflation to remain elevated or the economy to stay strong.
2. Mortgage Rates Follow the 10-Year Treasury Yield
Most 30-year fixed mortgage rates track closely with the 10-year Treasury yield.
If investors demand higher yields on those bonds (because they expect more inflation or risk ahead), mortgage rates climb too — even if the Fed is easing.
That’s why the connection between Fed cuts and mortgage rates is often weaker than people assume.
3. Inflation Is Still Sticky
Mortgage lenders care most about inflation. If it doesn’t cool meaningfully, lenders will continue pricing loans higher to protect the long-term value of their returns.
That means even with Fed cuts, mortgage rates can hold steady or inch up.
4. Markets Move Ahead of the Fed
By the time the Fed actually cuts, the market has usually already priced it in. Investors move on expectations, not announcements — so rate cuts rarely produce an immediate mortgage drop.
The Savvy Buyer’s Playbook
Here’s what savvy buyers understand about today’s market:
- The market is shifting. Prices are no longer climbing at last year’s pace. Many listings are seeing fewer offers and longer days on market.
- Negotiation power is back. With more balanced conditions, buyers can often secure price reductions, inspection credits, or closing-cost assistance.
- Timing the rate is less important than timing the market. If prices continue to soften, locking in a property now — even at a higher rate — can be smarter than waiting for both prices and rates to rise again later.
- You can always refinance. When rates do eventually come down, today’s buyers can refinance — but they’ll already own the home they wanted at a better price.
In short, the strategic buyers are acting now, not because rates are perfect, but because they understand leverage has shifted.
The Bottom Line
The Fed can nudge short-term borrowing costs, but mortgage rates dance to their own rhythm, driven by long-term expectations about inflation, growth, and risk.
While others wait for a miracle, savvy buyers are making calculated moves — negotiating strong deals in a market that’s finally offering breathing room.
So, if you’ve been waiting for the “perfect” rate, remember this:
You can’t control rates — but you can control timing, price, and negotiation.
