Mortgage rates ticked up after the Fed cut, following a familiar path

Core Insights - Mortgage rates have increased following the Federal Reserve's recent interest rate cut, which is a common but counterintuitive trend [1][2] - The average 30-year fixed mortgage rate rose to 6.35% from 6.13% just before the Fed's rate cut [1] - Fed Chairman Jerome Powell indicated that while the Fed's decisions influence mortgage rates, there is no guaranteed outcome as the economy faces challenges [2] Mortgage Rate Trends - Prior to the recent increase, mortgage rates had been declining for several weeks as markets anticipated the Fed's cut and employment data showed a slowdown [4] - The Fed's recent 25 basis point cut did not lead to a decrease in mortgage rates, which have historically risen during previous rate cut periods [5] - Financial markets are expecting a more aggressive easing of monetary policy than what the Fed is likely to implement, suggesting limited further declines in mortgage rates [6] Borrower Behavior - There has been a significant increase in refinancing demand, which surged by 58% week-over-week and is up 70% year-over-year [7] - Mortgage applications for home purchases also saw a 3% increase week-over-week, indicating a potential uptick in market activity [7] - Despite the improvement in mortgage demand, home sales have remained sluggish due to high home prices and elevated mortgage rates [7][8]