Homebuyers tour the home with a real estate agent.
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The Federal Reserve on Wednesday cut interest rates for the third time in 2024. Despite the move, mortgage rates rose.
The 30-year mortgage rate rose to 6.72% for the week ending Dec. 19, one day after the Fed's meeting, according to Freddie Mac data via the Fed. This represents an increase from 6.60% from the previous week.
In real time, the 30-year mortgage interest rate rose to 7.13% on Wednesday, compared to 6.92% the day before, according to Mortgage News Daily. It gained as much as 7.14% on Thursday.
Fed 'bond market panic'
The so-called Fed conspiracy this week showed fewer signs of further interest rate cuts in 2025, according to Melissa Cohn, regional vice president of William Raveis Mortgage in New York.
The dotted chart, which indicates individual members' expectations about interest rates, showed officials expect the benchmark lending rate to fall to 3.9% by the end of 2025, equivalent to a target range of 3.75% to 4%. After the recent interest rate cut, the interest rate currently ranges between 4.25% to 4.50%.
When the Fed made its first rate cut in September, it had forecast four quarter-point cuts, or a full percentage-point cut, for 2025.
“This, in conjunction with Trump’s desired policies on tariffs, immigration and tax cuts — all of which are inflationary — has spooked the bond market,” Cohn said.
Mortgage rates also tend to move in anticipation of what the Fed will do at its upcoming meetings, said Jacob Channel, chief economist at LendingTree.
For example, mortgage rates fell this summer and early fall, in anticipation of the first interest rate cut since March 2020.
Therefore, mortgage rates may not do “anything particularly exciting” in the face of an actual Fed meeting, he said.
