An aerial view of homes in a neighborhood on August 27, 2025 in San Francisco, California.
Justin Sullivan | Getty Images
As the Federal Reserve lowered its benchmark interest rate this week, mortgage rates responded by doing just the opposite.
The average rate for 30-year fixed-rate mortgages has jumped 20 basis points since Chairman Jerome Powell announced the cut Wednesday and held a news conference, according to Mortgage News Daily.
This also happened the last time the Fed cut rates, and the reason is quite simple: the bond market had already priced in a cut, but it didn’t like Powell’s comment.
On Tuesday, the average 30-year fixed rate fell to 6.13%, matching the recent low on September 16, the day before the Fed’s latest cut was announced, and marking the lowest level in a year.
Then this week, after the Fed announced it would cut rates and Powell answered questions at a news conference, that rate jumped 14 basis points on Wednesday and rose another 6 basis points on Thursday, to 6.33%, 20 basis points higher than Tuesday. Last time, in September, the rate on the 30-year fixed mortgage increased again, to 6.37%.
“Market enthusiasm for three Fed rate cuts in 2025 has become a little too much for the Fed’s liking,” Matthew Graham, chief operating officer of Mortgage News Daily, said in a client note. “The market was almost 100% sure of a further decline in December. The Fed wasn’t as certain, and Powell made a point of saying so yesterday. The result is a slight reset of yields to levels that are more consistent with a December decline being a solid possibility, but not a complete lock-in.”
The recent drop in rates has caused a rush on refinances, with such requests increasing 111% last week year-over-year, according to the Mortgage Bankers Association. The drop in rates, however, has not changed things much for potential buyers.