The day after the Fed trimmed short-term rates by 25 basis points, mortgage rates did the opposite of what many expected. The 30-year fixed rate, which had been on a steady decline since hitting 7.08% in May and dropping to 6.13% on Tuesday, suddenly reversed course climbing back up to 6.37% yesterday, reported by Mortgage News Daily. Even with the bump, rates are still hovering near their lowest levels of the year. According to the Mortgage Bankers Association:

The Fed doesn’t set long-term rates like the 30-year mortgage, but its policies do influence them. Much of the recent positivity was already priced into the bond market, which mortgage rates follow. We saw a similar pattern last year: the average 30-year fixed dipped to 6.11% before the Fed’s 50-basis-point cut, then climbed back to 7% by the end of October. Will that happen again? Hopefully not — Jerome Powell signaled more cuts are likely, though the market remains sensitive to inflation and jobless claims. Either way, improving affordability is driving an uptick in buyer demand, a positive sign for the fall market — one that could strengthen further if additional rate cuts are on the horizon.