Blog - The Lending Coach

Mortgage Rates Jump After the Fed’s Rate Cut — Here’s Why

November 3, 2025 / Tom Bonetto / 0 Comments

If you’ve heard that the Fed cut interest rates and wondered why mortgage rates rose instead of fell, you’re not alone.

It’s one of the most common misunderstandings in the market—and last week’s Fed meeting was a perfect example of why that happens.

The Federal Reserve lowered its benchmark rate by 0.25%, and also announced the end of quantitative tightening (QT)—its long-running effort to reduce bond holdings.

Both moves were widely expected, and neither created a big market reaction on their own.

But when Fed Chair Jerome Powell spoke during his press conference, he made it clear that another rate cut in December was not guaranteed.

When asked about a rate cut in December, Powell stated “it’s not a foregone conclusion – far from it.”

That comment alone shifted market expectations, sending Treasury yields and mortgage rates higher within hours.

Why Mortgage Rates React Differently

Mortgage rates don’t move directly with the Fed’s rate changes. Instead, they follow the bond market, which constantly adjusts based on what investors expect the Fed will do next.

When Powell signaled uncertainty about future cuts, bond traders adjusted those expectations upward—pricing in fewer rate reductions ahead.

That caused bond prices to fall and yields (and mortgage rates) to rise.

In short:

The Fed’s current rate cut = already expected.
Powell’s tone about the future = what moved rates higher.

As a result, the average 30-year fixed rose back to levels last seen in mid-October, even though it remains lower than most of the past year.

What’s Next for Mortgage Rates

With the Fed now taking a more cautious approach, the market’s focus shifts back to the economic data that’s been delayed by the government shutdown.

Upcoming reports on jobs and inflation will likely set the tone for where rates go next.

If those reports show inflation cooling or job growth slowing, we could see another move lower in bond yields—and, eventually, mortgage rates. But until that happens, expect volatility to continue around Fed commentary and inflation data.

What This Means for Homebuyers

Even though rates ticked up after the Fed meeting, they’re still hovering near some of the lowest levels in the past year.

For buyers and homeowners considering refinancing, this period remains one of the most favorable we’ve seen since 2022.

Here’s what to do now:

Lock in a rate if you’re under contract or close to applying.
Stay informed—the next inflation report could open another window of opportunity.
Plan ahead—today’s movement shows how quickly markets react to Fed comments.

Reach out to me today to discuss your current situation and to make sure you are not missing out. I’d be happy work with you and explore options.

If it’s easier, you can schedule a call with me here…

The blog postings on this site represent the positions, strategies or opinions of the author and do not necessarily represent the positions, strategies or opinions of Guild Mortgage Company or its affiliates. Each loan is subject to underwriter final approval. All information, loan programs, interest rates, terms and conditions are subject to change without notice. Always consult an accountant or tax advisor for full eligibility requirements on tax deductions.

Mortgage Rates Over the Past Three Weeks: What’s Changed

October 14, 2025 / Tom Bonetto

orange calculator beside the black smartphone

Over roughly the last three weeks, U.S. mortgage rates have edged downward, reaching their lowest levels in about a year.

According to Freddie Mac’s most recent data, the average 30-year fixed mortgage rate fell to 6.30 % from 6.34 %.

This decline is modest, but meaningful in the current interest rate environment — especially given how tightly rates have been trading lately.

In prior weeks, there was also a rebound in rates: for example, the week ending October 2 saw average rates rise from 6.30 % to 6.34 %, as Treasury yields ticked upward.

But the recent movement has tilted downward again, amid growing caution about economic strength.

Recent Months to Today

As of October 14, 2025, the average 30-year fixed mortgage rate stood at 6.30 % — down from 6.34 % the prior week.
Over the past several weeks, rates have settled in their lowest band in roughly a year.
Earlier in 2025, rates were higher — in many places above 6.8 % or even close to 7.0 % for conforming loans, depending on timing and market conditions.
Looking back further, we see that since 1971, the long-term average 30-year fixed rate is about 7.71 % (through 2025)
In other words, current rates are still below that historical average, though far from the ultra-low rates seen in the 2010s and early 2020s.

Why Rates Are Moving: Key Drivers

To understand why mortgage rates have shifted, it helps to zoom out and see the levers that push long-term borrowing costs:

1. Treasury yields & the bond market

roll of american dollar banknotes tightened with band

Mortgage rates are closely linked to longer-term Treasury yields (especially the 10-year). When investors buy Treasurys, yields fall; when they sell, yields rise. Mortgage lenders price based on these benchmarks.

In recent weeks, Treasury yields have shown some softness, reflecting investor appetite for safer assets amid economic uncertainty. That downward pressure on yields helps bring mortgage rates lower.

2. Economic data & inflation

Every inflation report, employment release, and GDP update can swing expectations about future interest rates. If inflation shows signs of sticking higher, markets will demand higher yields (and mortgage rates) to compensate.

Conversely, weak jobs or growth data can boost expectations of rate cuts and push long yields lower.

In recent weeks, signs of softening in labor markets have grown more pronounced, which has helped ease rate pressures.

3. Federal Reserve policy expectations

The Fed doesn’t set mortgage rates directly—but its policy decisions and forward guidance are central to rate expectations. Markets are watching how many cuts the Fed will enact in 2025 (and how fast) and how strongly it will resist inflation.

Recently, the Fed has signaled caution, acknowledging that inflation risks remain. But weaker labor data may give it more room to ease.

4. Supply, demand & housing market sentiment

Mortgage rate movement also reacts to credit demand, lender competition, and overall confidence in the housing market. As rates dip, some borrowers respond quickly with refinance or purchase activity. That can feed back into pricing dynamics.

In fact, even small rate reductions lately have triggered increases in refinancing inquiries.

Also, broader uncertainties — such as the current U.S. government shutdown — create additional caution in markets, which can tilt toward lower yields (and lower mortgage rates).

What to Watch Next: Forward Outlook & Risks

Given where we are, here’s what I see as the main potential paths forward — and what borrowers should watch for.

Base Case: Modest Further Decline or Plateau

Most forecasts expect mortgage rates to stay where they are or possibly drift modestly lower through late 2025. For example, Fannie Mae recently revised its year-end expectation to 6.4 %, and 2026 to ~6.0 %.

Other analysts believe rates will more or less stay in the 6.2 %–6.6 % range through year-end, depending on economic data.
If inflation continues to ease and labor markets soften, bond yields could fall further, dragging mortgage rates down with them.

Upside Risk: Rates Could Rise

If inflation surprises to the upside, markets could push yields (and thus mortgage rates) higher.
Strong economic data — especially in jobs, consumer spending, or corporate profits — could make the Fed more reluctant to cut or even force it to reconsider policy tightening, which would ripple through longer-term yields.
Global or fiscal surprises (e.g. government shutdowns, debt ceiling worries, geopolitical events) can trigger volatility in bond markets, pushing rates upward.

Final Takeaways for Borrowers & Homebuyers

It’s not a dramatic rate cut that is in play — the recent moves are incremental. But every basis point matters when you’re financing a large amount.

a person giving a bundle of keys to another person

If you’re in the market now and your numbers make sense, don’t wait on “perfect” rates. Locking something in is often better than trying to time the bottom.

Also, do keep a close eye on inflation numbers, payrolls/unemployment data, and Fed communications. These will be the levers moving rates in the coming weeks.

Finally, for clients who are refinancing or planning purchases in 2025, building in some “wiggle room” (i.e. rate buffers) is prudent given the potential volatility.

Reach out to me today to discuss your current situation and to make sure you are not missing out. I’d be happy work with you and explore options.

If it’s easier, you can schedule a call with me here…

Have Recent Fed Cuts Caused Mortgage Rates to Rise?

September 25, 2025 / Tom Bonetto

As we have seen over the last few days, mortgage rates and bonds have actually worsened since the Federal Reserve cut their Federal Funds rate on September 17^th.

a red paper bag in the middle of red balloons with percentage symbols

Markets, including longer-term treasuries and mortgage rates, are forward-looking and often price in a Fed rate cut in advance of the actual Fed cut, once it has been clearly telegraphed.

I’ve read many articles recently that fall into the trap of disregarding the forward-looking nature of the market by measuring the effect of a Fed rate cut on longer-term rates and mortgage rates from the date of the cut.

More importantly, there are coincident economic reports that can greatly influence the move in interest rates subsequent to the cut.

The September 17^th Cut

Let’s look at a few examples. Most recently, the Fed cut rates on September 17 and the 10-year Treasury touched at 3.99% that day. Yields have risen since then to 4.17% (as of today), and a large contributing factor was the sudden drop in initial jobless claims on September 18 – the morning after the Fed cut rates.

The Fed’s rational for cutting rates, even though Core Personal Consumption Expenditures (PCE) is above their target, was because they were concerned about weakness in the labor market.

But initial claims showed a drop from 264K in the previous read to 231K. This significant drop, to some degree, is contrary to a weakening labor market, and didn’t support the Fed’s reasoning for cutting rates.

Prior to the Cut

Now let’s look at what happened before the most recent Fed cut on September 17. During his Jackson Hole speech on August 22, Chair Jerome Powell clearly telegraphed that a rate cut was coming. This was when the bond market started to react.

The day of the Jackson Hole speech by Powell, the 10-year Treasury was at 4.32%. By the time of the actual cut on September 17, the 10-year Treasury had dropped by over 25bp.

Additionally, mortgage rates dropped even more, thanks to a narrowing mortgage spread. So, looking at the change in rates after the Fed actually cuts ignores the market’s anticipation of the cut and leads to false narratives.

Recent History

There is a lot of historical precedent for this as well. Look no further than the Fed’s 50bp rate cut on September 18, 2024. The chart below paints a very clear picture.

In the two to three weeks prior to the actual cut, the 10-year Treasury made a significant drop in yield, and mortgage rates declined by a whopping 5/8%. Again, markets are forward-looking.

Subsequent to the Fed cut, mortgage rates and Treasuries remained stable until October 4, when the September 2024 jobs report was released. There was a huge upside surprise in job creations totaling 254K, which sent the bond market into a selloff.

We now know, from the QCEW, that it is likely that less than half of those jobs were actually created.

This is why we need to dig more deeply, and not only contemplate the market’s anticipation, but consider what factors caused interest rates to move subsequent to the Fed rate cut. Had the jobs number been less than market expectations, it’s highly likely that interest rates would have declined.

And the same story applied to the next rate cut on November 7, 2024. The chart below shows that mortgage rates were declining until another upside surprise in the job numbers released in early December caused them to bump higher. And this happened yet again after the December 18, 2024 cut.

Long Term History

Now, let’s gain a more historical perspective. As you can see over the long run, there is a reasonably good correlation between the direction of the Fed Funds Rate and mortgage.

We also need to look at what the Fed is leaning towards in their upcoming meetings The “Dot Plot” system is the Fed’s way of giving the public a snapshot of how its policymakers see the future path of interest rates, but it’s always subject to change as the economy evolves.

I don’t recall a more divided Fed with such wide disparities in opinion. Future Fed rate cuts this year hang tenuously on continued labor weakness. Therefore, strength in the labor market would likely take the expected two additional rate cuts through the end of 2025 off the table.

This puts enormous focus on the outcome of the September jobs report, which is set to be released on October 3. This will ultimately decide the direction of Fed cuts at their upcoming meetings.

All that said, another factor which must be contemplated is the market’s interpretation of whether a Fed rate cut could be too stimulative to the economy, bringing on an increase in inflationary pressures.

In Conclusion

As shown above, there are many factors that go into the reaction mortgage rates have to Fed rate cuts.

So, to simply state that mortgage rates and long-term Treasury yields rise when the Fed cuts rates is not only myopic, but a fool’s game, as it fails the deep thinking required to correctly analyze all the above considered.

Now’s the Time: Mortgage Rates Are Dropping, but the Window May Be Short

September 12, 2025 / Tom Bonetto

Mortgage interest rates have taken a welcome step lower in the past nine days—and that means homeowners have a fresh opportunity to refinance.

According to Freddie Mac, the 30-year fixed mortgage rate slid to 6.35% the week ending September 11, down about 0.15% from the prior week.

The 15-year and 20-year fixed fell as well, landing around 5.875%.

For investment properties and 2nd homes, we are seeing rates in the mid 6% range, as well.

Other industry surveys—Bankrate, Money.com, and Reuters—are showing similar declines across the board.

What’s Driving the Drop

The reason for the dip lies in the bond market. The 10-year Treasury yield, which heavily influences mortgage rates, has retreated in recent days.

Investors are increasingly betting that the Federal Reserve will begin cutting short-term interest rates later this month.

Combined with softer labor market data and easing inflation pressure, long-term yields have fallen—and mortgage rates have followed.

Treasury Dips Don’t Last Long

If this feels like déjà vu, that’s because it is. Since mid-2023, there have been eight significant downward moves in the 10-year Treasury yield.

You can see them highlighted in the chart above.

Each one of those dips lasted anywhere from just three days to three weeks before the trend reversed and rates climbed again.

That’s the key takeaway: lower-rate windows don’t last long. Waiting to see if rates fall further often means missing the opportunity altogether.

Why Refinancing Now Makes Sense

If you bought a home within the past two and a half years, there’s a good chance your mortgage rate is higher than where the market is today.

Even a small rate reduction can create meaningful monthly savings and improve long-term financial flexibility.

If you’ve recently completed a cash-out refinance, now may be an especially smart time to review your options. Lowering your interest rate can reduce the cost of carrying that debt, even if you pulled equity from your home earlier this year.

Beyond lowering monthly payments, refinancing may also help you:

Switch from a 30-year to a 15- or 20-year term, paying off your home faster.
Consolidate higher-interest debt into your mortgage at a lower rate.
Remove mortgage insurance if you’ve built enough equity.

The Time to Act Is Now

Rates are still volatile.

Inflation readings, labor reports, and Federal Reserve announcements can all shift the bond market quickly. The history since 2023 is clear: when Treasury yields dip, mortgage rates dip too—but they rarely stay down for long.

That’s why now is the time to act.

If your current mortgage is above today’s averages, let’s run the numbers together. Locking in while rates are on the downside could secure savings that last for years to come.

Here’s The Bottom Line

Lower rates don’t wait around. If you’ve bought a home in the past 2.5 years or completed a recent cash-out refinance, this is your window to refinance into a smarter mortgage.

Reach out to me today to make sure you are not missing out and we can begin to explore options.

If it’s easier, you can schedule a call with me here…

The FHA Streamline Refinance Explained: Is It Right for You?

September 1, 2025 / Tom Bonetto

glass container with stainless scooper surrounded with paper bills

If you currently have an FHA loan, you may have heard about the FHA Streamline Refinance—a simplified refinance option designed to make lowering your interest rate fast and easy.

But is it the right move for you?

Let’s break it down in plain language so you can make a confident decision and have an understanding of the program’s pros and cons.

What Is an FHA Streamline Refinance?

The FHA Streamline Refinance is a special program from the Federal Housing Administration that allows homeowners with an existing FHA loan to refinance without the typical hassle. Here’s why people love it:

✅ No appraisal required – Your home’s current value doesn’t matter.
✅ Minimal documentation – Less paperwork than a traditional refinance.
✅ Fast process – In many cases, it can close in as little as 30 days.

The main goal? To help homeowners take advantage of lower interest rates and reduce their monthly payments without jumping through all the usual hoops.

Who Qualifies for an FHA Streamline?

To be eligible, you need to meet a few basic guidelines:

You must already have an FHA-insured mortgage.
You need a history of on-time payments. Generally, the last 6 months should be current.
Your new loan must have a net tangible benefit. That means it should lower your payment or move you to a more stable loan (like from an ARM to fixed).

One more important note: You cannot take cash out with this refinance. If you’re looking for cash from your equity, there are other options we can discuss.

What About the Appraisal?

No appraisal is usually required—which is a huge benefit if your home’s value hasn’t skyrocketed or if the market is soft. As long as you meet the payment history requirements and the loan has a net tangible benefit, you’re good to go.

What Are the Downsides?

Like any loan, there are trade-offs. A few things to keep in mind:

Mortgage insurance stays – If you have an FHA loan, you still have MIP (Mortgage Insurance Premium).
Not for cash-out needs – This is a “payment-saving” refinance only.
Closing costs still apply – Even though they can be financed, there are costs involved.

How Long Does It Take?

In most cases, FHA Streamline Refinances close in 30 days or less. That’s significantly faster than a traditional refinance because there’s less documentation and no appraisal to slow things down.

Is It Right for You?

If you:
✔ Have an FHA loan
✔ Want a lower payment
✔ Don’t need cash-out
✔ Like the idea of a quick and easy process

…then the FHA Streamline Refinance could be a perfect fit.

Ready to See Your Savings?

Every situation is different, so let’s crunch the numbers together.

You can reach out to me here…and if it’s easier, you can set an appointment with me here.

If an FHA Streamline Refinance can help you lower your payment, reduce your interest rate, and keep more money in your pocket, we’ll find out together!

The Lending Coach