While the Federal Reserve cut its benchmark interest rate on Wednesday, mortgage rates responded by doing just the opposite.
The average rate on the 30-year fixed mortgage has jumped 20 basis points since Chairman Jerome Powell announced the cut and held a press conference, according to Mortgage News Daily.
This happened the last time the Fed cut its rate as well, and the reason is pretty simple: The bond market had already priced in a cut, but it didn’t like the commentary from Powell.
On Tuesday, the average rate on the 30-year fixed had fallen to 6.13%, matching the recent low on Sept. 16, which was the day before the Fed announced its last cut, and marking the lowest level in a year.
Then this week, after the Fed said it would cut rates and Powell answered questions in a news conference, that rate shot up 14 basis points on Wednesday and rose another 6 basis points on Thursday, to 6.33%, an even 20 basis points higher than where it was Tuesday. The last time around in September, the rate on the 30-year fixed mortgage went even higher, to 6.37%.
