{"id":4104,"date":"2024-10-28T09:15:40","date_gmt":"2024-10-28T14:15:40","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=4104"},"modified":"2025-02-10T12:30:04","modified_gmt":"2025-02-10T17:30:04","slug":"why-the-fed-doesnt-actually-change-your-mortgage-rates","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/why-the-fed-doesnt-actually-change-your-mortgage-rates\/","title":{"rendered":"Why the Fed doesn\u2019t actually change your mortgage rates"},"content":{"rendered":"\n

Reading this title, you might be thinking, \u201cWhat? The Fed doesn\u2019t change my rates?<\/a> Yeah, right!\u201d And that\u2019s totally fair\u2014it’s hard to ignore the constant buzz from the media about the connection between the Fed and mortgage rates.<\/a> Whether the Fed is raising rates or cutting them, it seems like every news cycle ties the Fed\u2019s actions to the rates you pay.<\/p>\n\n\n\n

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But here\u2019s the real story: Yes, the Fed impacts rates, but not directly.<\/strong> In fact, mortgage rates often move<\/a> before<\/em> the Fed even makes a decision. Here\u2019s why.<\/p>\n\n\n\n

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The market already knows what the Fed\u2019s going to do<\/h3>\n\n\n\n

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Take September 2024, for example. The Fed made its first rate cut in 4 years. But here\u2019s the twist: mortgage rates actually held steady instead of dropping. Why? Because the mortgage industry had already anticipated that rate cut, and rates had already dropped in the weeks leading up to the Federal Open Market Committee (FOMC)<\/a> meeting, where the decision was officially made.<\/p>\n\n\n\n

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So, even though the Fed announced the cut, the market had already priced it in. Mortgage rates had adjusted beforehand, and by the time the Fed acted, the news wasn\u2019t new\u2014it was already baked into the numbers.<\/p>\n\n\n\n

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In fact, rates actually increased after the Fed cut<\/strong>, as the market began to react to other signals\u2014namely, that the Fed might slow down the pace of future cuts more than anticipated.\u00a0<\/p>\n\n\n\n

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See today’s rates<\/a><\/div>\n<\/div>\n\n\n\n

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Why do mortgage rates and Fed rates move independently?<\/h3>\n\n\n\n

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So, why doesn\u2019t the Fed\u2019s rate directly affect mortgage rates? Let\u2019s break it down:<\/p>\n\n\n\n

The Fed controls the Federal Funds rate<\/strong>, which is the rate at which banks lend to each other overnight. But mortgage rates are set by lenders based on other factors, like:<\/p>\n\n\n\n