Mortgage Rates Rise Despite Fed Cut

After the Federal Reserve's Sept. 17 quarter-point cut, 30-year mortgage rates rose from near 11-month lows into the mid‑6% range (about 6.3%–6.7%), leaving many borrowers with mortgage costs higher than before the cut. Long-term mortgage rates have tracked the 10-year Treasury and inflation expectations more than the Fed's short-term policy rate, so the Fed cut did not automatically lower mortgage costs. Higher long-term yields pushed mortgage applications and refinances down in the week ended Sept. 26—MBA data showed sizable drops in market activity and refinance share—while builders' incentives and limited-time financing offers (some with initial rates as low as 1.99%) helped boost new-home sales. Markets still expect at least one Fed cut later in October that could lower mortgage rates, but mixed economic data and government-shutdown risks could keep long-term yields and mortgage rates volatile. Separately, the Bank of Canada faces a near-even chance of holding rates or cutting by 25 basis points this month after slightly stronger-than-expected July GDP growth of 0.2%, leaving Canadian policy markets divided.