The 30-year mortgage rate shot up the day after the Federal Reserve cut interest rates.
Hours after the Federal Reserve cut its benchmark interest rate on Wednesday by 25 basis points, mortgage rates ticked up 9 basis points.
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The Fed announced Wednesday that it would trim its key policy rate by a quarter of a percentage point, bringing it to the range of 4% to 4.25%. Around the time of the announcement, Mortgage News Daily, a website that posts daily updates on rates, crashed - possibly the result of people flocking to the site to see how mortgage rates reacted. The company told MarketWatch it was looking into why the site was down that afternoon.
Mortgage News Daily later reported that the 30-year rate went up by 9 basis points (0.09%) to 6.22% on Wednesday. On Thursday, it reported that the 30-year rate had gone up by 15 more basis points, to 6.37%.
In contrast, a report by Freddie Mac measuring weekly averages for the 30-year rate found that mortgage rates fell to the lowest level in 12 months on Thursday. That's because Freddie Mac's report gathered information prior to and after the Fed's decision was announced. The weekly report doesn't survey lenders, but is based on actual mortgage applications to lenders across the country that are sent to Freddie Mac.
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Mortgage rates aren't tied to the Fed's interest-rate moves. Instead, they typically fall in advance of a Fed rate cut, as MarketWatch has reported, because bond investors are trying to anticipate where the central bank will go. Mortgage rates are priced off the 10-year Treasury note BX:TMUBMUSD10Y by adding a spread.
Hence, the 10-year Treasury yield is a better gauge of how mortgage rates will move - and the 10-year yield was trending higher Thursday.
Mortgage rates have decoupled from the Fed's benchmark / targets, basically, because fiscal policy and the overall economic outlook are so bad that traditional monetary policy is no longer effective.
This is generally what economists would call 'a bad sign'.
Myself, I would go so far as 'a very bad sign.'
My condolences to anyone who confused their local new/used home salesperson with a qualified economist, if they told you, and you believed, something like 'Fed rate cuts will lower mortgage rates!"
... Which of my fears are overblown?
Can you be more specific?
You seem to be coming at this from the angle of someone with enough money to attempt to actively manage a portfolio in a way that could possibly be some kind of useful.
I am coming at this from the perspective of the vast majority of Americans who do not.
I was responding to the idea that mortgage rates have decoupled from the Fed fund rate. The difference noted in the article is just noise... unfortunately so much reporting has a sprinkle of facts, but the goal isn't to inform.
I mean, they moved contra to what you would normally expect.
If you're saying that they moved up because the rate cut was expected to go down by more...
That's still the reverse of what normally happens, and indicates that rates would need to fall a lot further for mortgage fianciers to have any faith in the price levels of the homes they are financing.
This shows that they don't.
And my bet is that they will stay more decoupled as we go further into this increasingly financially chaotic period, no matter what the Fed does, because ... the broad economy is so fucked that monetary policy alone cannot help the situation, and is in fact likely to cause even more chaos, as the economy continues to warp and crumble and snap in mostly unpredictable ways.
Such as, for example, ... what will the effects of a broad devaluation of the dollar against other currencies be, on the housing market?
I can tell you it will be very complex, but I cannot say exactly how, and in which ways, to what magnitude, as fiscal policy is currently in the charge of unpredictable and fickle idiots with gigantic egoes and wafer thin skin.
The cut was expected, so it was already priced in.
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2025
The 10 year fell way before the announcement
It was 4.5% in June, 4.25% in July and beginning of September
It slid down to 4% a few weeks ago as analysts predicted a cut
Just reminded me of this copypasta:
Ahaha!
The market is so rational that free will is impossible, actually, turns out we're all Calvinists by way of day trading, ahahaha!
If it's all unknowable, then why suppose something and present evidence? I agree the "priced in" trope is just another way to say "I don't understand". If you still think mortgage rates have decoupled, show us your murderboard.
... Murderboard?
Dude, you don't pay me enough for that.