Why Idaho Mortgage Rates Didn't Drop (Even After the Fed's Cut)

If you're a homebuyer or homeowner in Boise, Meridian, or Nampa, you probably did a double-take last week. The Federal Reserve cut rates on Wednesday, but mortgage rates went up.

That's like hearing gas prices are falling - right after you filled your tank at $4.50 a gallon. So, what gives? Let's unpack it, Idaho-style.

What the Fed Actually Did

On Wednesday, the Federal Reserve lowered the federal funds rate by 0.25%, bringing it into a 3.75% - 4.00% range. The move was meant to stimulate borrowing and calm fears of an economic slowdown.

But they also made two major announcements that rattled investors in the bond and mortgage markets:

1. They ended Quantitative Tightening (QT) - their program that was shrinking the Fed's massive balance sheet.

2. They signaled they may not cut again in December, citing persistent inflation and job market uncertainty.

That combination threw cold water on the idea that rates would continue to fall.

Why Ending QT Hurt Mortgage-Backed Securities (MBS)

Quantitative Tightening meant the Fed was selling off Treasury bonds and mortgage-backed securities (MBS) it had bought over the past several years. This reduced demand for MBS, which slightly increased yields (and mortgage rates).

When the Fed announced they were stopping QT, it seemed positive at first - no more unloading MBS, right?
But investors saw it differently. It signaled that the Fed may be less committed to fighting inflation, and that spooked the bond market.

So instead of demand flooding back into MBS (which would lower mortgage rates), investors demanded higher yields to offset future inflation risk - and that pushed mortgage rates upward.

In short: The Fed's "good news" wasn't taken as good news by mortgage investors.

The December Dilemma: Why the Fed Might Pause Again

Markets initially expected another rate cut in December. But the Fed's statement was cautious: inflation remains above target, and economic data are sending mixed signals.

That means December's meeting could be a "pause" instead of another cut - especially if inflation stays sticky or the labor market rebounds.

For Idaho homebuyers, that means it's risky to "wait for the next cut." Mortgage rates may fluctuate more from investor reaction than from the Fed's decisions themselves.

Why Idaho Mortgage Rates Didn't Drop Anyway

Even without the QT twist, mortgage rates are driven more by long-term bond yields, not short-term Fed rates. When investors expect higher inflation or uncertainty, they demand higher yields on bonds and MBS - so rates climb.

Quick Recap:

• Mortgage rates follow the 10-year Treasury yield, not the Fed funds rate.

• Ending QT unnerved MBS investors, who raised yields.

• Uncertainty about December cuts created volatility in bond markets.

• Inflation remains sticky, keeping long-term rates higher than expected.

• Idaho's housing market (Boise, Nampa, Meridian) still has strong demand and tight supply, which holds rates firm.

What It Means for Idaho Buyers and Homeowners

If you're house-hunting in Boise or refinancing in Nampa:

• Don't assume the next Fed meeting will fix rates.

• Be ready to lock when the bond market stabilizes, not when headlines sound good.

• Local expertise matters: Idaho Housing loans, VA benefits, and conventional programs each react differently to market swings.

• Even small moves in bond yields can change rates by 0.125% - 0.25% overnight.

At 1st Choice Mortgage, we track these shifts daily and help borrowers plan their timing strategically.

Bottom Line

The Fed's cut wasn't the golden ticket many expected. By ending QT and hinting at a possible pause in December, they introduced more uncertainty into the bond market - pushing Idaho mortgage rates up, not down.

So if you're ready to buy or refinance, don't wait for perfect conditions. Work with a local lender who understands the Idaho market, knows how to time locks, and can tailor your strategy - especially if you're using VA, FHA, or Idaho Housing programs.

📞 Call to Action

Let's talk about your Idaho mortgage options before the next Fed meeting. Contact 1st Choice Mortgage to see what your best move is before the market moves again.