✅ Why mortgage rates can rise even when the Fed cuts ratesMortgage rates don’t move directly with the Fed Funds Rate. Instead, they are primarily driven by the 10-year Treasury yield and investor expectations about inflation, recession risk, and future Fed policy.Here are the main reasons this disconnect happens:1. Markets expected the rate cut alreadyIf investors already priced in the Fed’s cut weeks or months beforehand, then the cut itself is old news.When the announcement hits, mortgage rates may not fall—and often rise if the Fed hints at fewer future cuts.2. Fed cuts can signal economic troubleSometimes the Fed cuts because the economy is weakening. That can cause:Investors to worry about higher future inflation, orA “risk-off” move where money leaves bondsBoth of these drive the 10-year yield UP, which pushes mortgage rates UP even though the Fed cut.3. Bond investors wanted a bigger cutIf markets expect a 0.50% cut but the Fed only delivers 0.25%, that’s seen as “too tight.”Result:10-year yield jumpsMortgage rates move higher4. Fed messaging (“forward guidance”) matters more than the cutExample:The Fed cuts today, but says:“We may need to slow or pause future cuts.”That single sentence can raise mortgage rates, even though short-term rates just went lower.5. Inflation surprises after the cutIf new inflation data comes in hot after a Fed cut, the bond market panics → yields go up → mortgage rates go up.Quick summaryFed Cuts Rates Mortgage Rates Move✔ Expected or priced in Can rise or stay flat✔ Fed hints at fewer future cuts Often rise✔ Inflation remains sticky Rise✔ Economy looks unstable Rise❗ Only when 10-year yield falls Mortgage rates falltune in and learn https://www.ddamortgage.com/blogdidier malagies nmls#212566dda mortgage nmls#324329 Support the show

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