Mortgage Rates Take a Surprising Turn After Fed's Move

The Federal Reserve decided to lower its interest rate this week, but mortgage rates didn't follow suit. Instead, they went up.

Mortgage Rates Increase Despite Fed Cut

The average rate for a 30-year fixed mortgage increased by 20 basis points after the Fed's announcement and Chairman Jerome Powell's press conference, according to Mortgage News Daily.

Market Reaction to Fed Decision

This isn't the first time this has happened. The bond market had already factored in a rate cut, but it didn't like what Powell had to say.

Before the Fed's decision, the average mortgage rate had dropped to 6.13%, the lowest in a year. But after the Fed's announcement, the rate jumped up by 14 basis points on Wednesday and another 6 basis points on Thursday, reaching 6.33%.

Market Confidence and Fed Uncertainty

Matthew Graham, the chief operating officer at Mortgage News Daily, explained that the market was too confident about future rate cuts. The market was almost certain about another cut in December, but the Fed wasn't as sure. Powell made this clear during his press conference, leading to a slight adjustment in yields.

Refinance Applications Surge

The recent drop in rates had led to a surge in refinance applications, which were up 111% compared to the same time last year, according to the Mortgage Bankers Association. However, lower rates didn't do much to encourage potential homebuyers.

Market Disconnect

It's interesting to note that the bond market and the mortgage market don't always move in sync with the Fed's decisions. This can make it tricky for people trying to figure out the best time to buy a home or refinance their mortgage.