See photos and updates from listings directly in your feed
Share your favorite listings with friends and family
Save your search and get new listings directly in your mailbox before everybody else
The Federal Reserve delivered a rate cut today, but anyone waiting for a sudden drop in 30-year mortgage rates was left disappointed. Even after the announcement, mortgage rates are still sitting north of 6%. And once you listen closely to Chairman Jerome Powell’s remarks, the picture becomes a lot clearer.
Powell’s tone carried a familiar tension: progress on inflation, but not enough progress to let the Fed relax. That mixed message is exactly why mortgage rates refuse to budge.
Here’s what actually happened—and what it means for the housing market going forward.
1. The Fed Doesn’t Control Mortgage Rates—Long-Term Bonds Do
Powell made a point to reiterate something that often gets lost in headlines:
The Fed sets the overnight rate, but mortgage rates follow the 10-year Treasury yield.
That yield moves based on long-term expectations about inflation—not whatever the Fed does on a particular Wednesday afternoon.
So when Powell says things like:
- “Inflation has come down but is still above our goal,” and
- “We need more evidence that inflation is moving sustainably toward 2%,”
investors hear something very different than “rate cuts are coming.”
What bond traders actually hear is:
The fight against inflation isn’t over. Proceed with caution.
And when bond markets stay cautious, the 10-year barely moves…
which means mortgage rates barely move.
2. The Fed Is Still Worried About Housing Inflation
One of Powell’s most revealing comments today came when he pointed directly at housing:
“Housing services inflation remains elevated.”
That’s Fed-speak for:
Shelter costs (rent + homeowner equivalent rent) are still one of the biggest drivers of inflation.
Because shelter represents such a large portion of the inflation calculation, any stubbornness there makes investors assume:
- The Fed won’t ease aggressively,
- Inflation isn’t fully under control, and
- Long-term yields need to stay higher to reflect that risk.
In other words:
A rate cut doesn’t magically make mortgage rates drop if the Fed still believes housing is running hot.
3. Powell Admitted the Economy Is Slowing—But Not Enough for Big Cuts
Powell threaded a very intentional needle.
He acknowledged the cooldown:
- Hiring is losing momentum.
- Wage growth is easing.
- Consumers aren’t spending as aggressively as earlier in the year.
But then he pivoted:
“We are not declaring victory.”
To markets, that’s a giant neon sign flashing:
We may have cut today, but we’re not done monitoring inflation risk.
When the Fed signals caution, long-term rates stay sticky—even if the short-term rate just went down.
And since mortgages are priced off future expectations (not today’s decision), the result is exactly what we see now:
Mortgage rates stay above 6%, despite the Fed cut.
Bottom Line: A Rate Cut Isn’t Enough—The Market Wants Certainty
Until investors believe inflation is truly on a stable path back to 2%, they will keep long-term yields elevated. And until those yields fall, mortgage rates will remain higher than many buyers expect.
Powell essentially told the market:
- Yes, we cut.
- No, we’re not convinced inflation is tamed.
- Don’t expect a quick slide back to 4% mortgage rates.
For buyers and sellers, this means the housing market will likely continue in the same pattern we’ve seen all year:
steady demand, low inventory, and rates that drift slowly—not dramatically—over time.
