Not the week we were hoping for as rates rise after rate cut

We got a 25bps rate cut but mortgage rates moved higher.

Happy Friday from Local Mortgage!

A very interesting week for mortgage markets as we were reminded once again that the FED does not control mortgage rates. Even with the 25bps rate cut at Wednesday’s FED meeting, mortgage rates will end the week higher, back up to 6.00% for our best 30 year fixed conventional scenario.

The highly anticipated September FED meeting brought the first rate cut of 2025 with the FED lowering overnight rates by 25bps. The rate cut was no surprise, so investors were tuned into commentary regarding future FED policies. Chairman Powell stuck to the FED’s standard playbook, stating that the FED will look at data meeting by meeting when it comes to future rate cuts. Investors were looking for more from the FED, thus causing the pullback from the lows and pushing rates back up just a bit.

On top of the disappointing commentary from the FED, two other reports were bullish for the economy. Retail sales data reported for August were higher than expected, rising 0.6% from July to August, and weekly jobless claims were a bit lower than expected, coming in at 231,000 vs 240,000 forecast.

Next week’s main report will come on Friday with the PCE price index, which is the FED’s favored inflation indicator.

Hope everyone has a great weekend and thank you for reading.