Why Mortgage Rates are Rising as the Fed Keeps Cutting

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Nov 4, 2025

Mortgage rates are on the rise despite recent Fed cuts. Learn how Fed statements have stirred investor uncertainty, pushing rates up instead of down. Delve into alarming corporate layoffs and what they might signal for the economy. Discover why inflation is stubbornly high and affecting housing costs, plus which cities are feeling the pinch the most. Dave presents scenarios that could impact mortgage rates going forward, including what it would take to see rates return to the 5% range.

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INSIGHT

Fed Cut But Markets Repriced

The Fed cut the federal funds rate by 25 basis points but mortgage rates rose instead of falling.
Jerome Powell's press conference added uncertainty about future cuts, which pushed bond yields and mortgages up.

INSIGHT

Mortgages Track The Long End

Mortgage rates follow long-term bond yields, not the Fed's short-term federal funds rate.
Bond investors weigh inflation and recession risk differently than the Fed, so mortgage moves can diverge from Fed actions.

INSIGHT

Mixed Signals Keep Rates Sticky

The economy is sending mixed signals with weakening jobs and sticky inflation, a rare combination.
This ambiguity creates competing pressures on bond yields and keeps mortgage rates stuck.

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