Think a Fed rate cut means lower mortgage rates? Think again! 📈 Yesterday, the Federal Reserve cut the federal funds rate, but instead of mortgage rates dropping, they spiked. Here’s what happened:

1️⃣ The Fed’s “Hawkish” Tone Surprised Markets – While the rate cut was expected, the Fed’s dot plot and comments signaled higher rates for longer and a slow path to future cuts.

2️⃣ Treasury Yields Jumped – This new outlook sent long-term bond yields soaring. The 10-year Treasury yield rose 0.10%, and the 5-year yield (closely tied to mortgages) jumped 0.13%.

3️⃣ MBS Prices Dropped – Prices for Mortgage-Backed Securities (like the 30-year UMBS 5.5%) fell from 99.35 to 98.49 in just 24 hours. When MBS prices drop, lenders get less for the loans they sell, cutting into their margins.

4️⃣ Borrowers Pay the Price – To offset the drop, lenders raise rates for new borrowers. Mortgage rates are now 0.20% higher than they were yesterday, with top-tier 30-year fixed rates back over 7%.

📉 Watch this video to understand the chain reaction that turned a Fed rate cut into higher mortgage costs for homebuyers. It’s a must-know for anyone navigating today’s market!

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