Why Mortgage Rates Went Up After the Fed Cut Rates

Quick Take

Idaho mortgage rates after Fed cut announcements often surprise buyers. Instead of dropping, rates can move higher - as we saw today when lenders actually raised pricing following the Fed's decision.

The Fed cut its policy rate by 0.25% today, but many lenders worsened pricing intraday - yep, mortgage rates moved higher instead of lower. That's because markets had already priced in today's move, and the post-announcement details (plus the "dot plot") nudged bond yields up. Reuters+1

What Actually Happened Today

• Fed move: A quarter-point cut framed as "risk management," not the start of a rapid easing cycle. Reuters

• Dot plot tone: Policymakers are split on how many cuts remain this year; the median implies more easing by year-end, but several members see no further cuts - that uncertainty matters to bonds. Reuters

• Mortgage pricing: After the announcement, most lenders issued mid-day worsening, leaving rates higher than yesterday. That's straight from today's secondary-market recap. Mortgage News Daily

Why Mortgage Rates Don't Just "Follow the Fed"

Mortgage rates track long-term bond yields/MBS pricing, not the Fed funds rate directly. Traders front-run widely expected Fed decisions; by the time the press release hits, the move is "in the cake," and rates react to what's new in the outlook, not the action itself. Bankrate+1

The Last Few Weeks in Context

Leading into today, average 30-year rates drifted lower on weaker labor data and cut expectations - MBA's weekly survey had the 30-yr at ~6.39% (week ending Sept. 12) and a big refi/application pop. That soft tone is exactly why markets largely priced in today's cut before it happened. Reuters

What Will Move Rates Next (30 - 90 Days)

Two data lanes will steer the bus:

1. Jobs: First Friday's Employment Situation can yank yields quickly - weak jobs (rising unemployment, slower payrolls) usually help mortgage rates. (See BLS release calendar.) Bureau of Labor Statistics

2. Inflation: CPI (BLS) and PCE (BEA) are the Fed's compass. Core PCE is still running above 2% (July YoY ~2.6%), and the next PCE update hits Sept. 26. Stickier inflation = upward pressure on rates; cooling inflation = relief. Bureau of Economic Analysis+2Bureau of Economic Analysis+2

What This Means in Idaho (Boise • Meridian • Nampa • Caldwell)

• Buyers: Expect more sideways than swoon. Stability helps budgeting and locking when a property clicks.

• Refi homeowners: If you're well above today's market, opportunities still exist - especially with strategic float-down options and lock timing around data days.  We ONLY recommend you refinance if you can save at least .75 to 1.00 points in your rate, with OUT paying points or junk fees.

• Sellers/Realtors: Rate-sensitive segments may pause on volatile days; pricing strategy and seller concessions can keep deals together.

At 1st Choice Mortgage, we sit on the MBS screens all day so you don't have to. Want a game plan around the next CPI or jobs print? We'll map lock/float scenarios for your specific file.