Sell the news! After the Fed cut interest rates, the 30-year US mortgage rate soared by 20 basis points.

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Although the Federal Reserve cut interest rates as expected on Wednesday and announced the end of quantitative tightening starting December 1, the trend of US mortgage rates has given a hawkish response.

According to data from Mortgage News Daily, since Fed Chair Jerome Powell announced the rate cut and held a press conference, the average rate for 30-year fixed-rate mortgages has risen by 20 basis points.

This also happened during the last Fed rate cut, for a rather simple reason: the bond market had already priced in the rate cut, but the market did not like Powell’s remarks.

On Tuesday, the average 30-year fixed mortgage rate in the US dropped to 6.13%, matching the recent low point on September 16, which was the day before the Fed announced its previous rate cut and also the lowest level in the past year.

But this week, after the Fed announced the rate cut and Powell answered questions at the press conference, the 30-year mortgage rate jumped 14 basis points on Wednesday and rose another 6 basis points on Thursday, reaching 6.33%, a full 20 basis points higher than Tuesday. During the previous September rate cut, the 30-year mortgage rate was even higher, reaching 6.37%.

Matthew Graham, Chief Operating Officer of Mortgage News Daily, said in a client report:

“The market’s previous expectations for three more rate cuts in 2025 were overly optimistic, and this does not align with the Fed’s intentions. The market was nearly 100% certain there would be another cut in December. But the Fed is not so sure, and Powell specifically emphasized this yesterday. As a result, yields have experienced a slight pullback, returning to a more reasonable level: the market still believes a December rate cut is quite possible, but it’s not a sure thing.”

The recent drop in rates has led to a surge in refinancing applications. According to the Mortgage Bankers Association, refinancing applications rose 111% year over year last week. But the lower rates have not significantly stimulated potential homebuyers.

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