The Federal Reserve cuts short-term interest rates, but mortgage rates rise. The Fed controls short-term rates, while mortgage rates are tied to long-term bonds. When the Fed cuts its federal funds rate, the prime rate, savings account rates, and loan rates fall. Credit card rates may lower later.

Mortgage rates are long-term debts tied to benchmarks like the 10-year Treasury. They react to events like inflation and employment. Rates can fall after a Fed cut or rise unexpectedly. Weekly 30-year fixed rates dropped from 6.89% to 6.26% before bouncing back to 6.30% after the Fed cut in September 2025.

To see mortgage rates continue to drop, the economy needs softer labor or inflation data. Don’t base home-buying decisions on short-term trends. Have a budget, down payment, and idea of how much house you can afford. Make a realistic plan and have a list of potential mortgage lenders ready.

Laura Grace Tarpley edited this article.

Read more at Yahoo Finance: Why didn’t mortgage rates fall after the Federal Reserve rate cut?