Since the Fed has cut rates 50bp on September 18th, 30-year mortgage rates have risen by roughly 0.75%.

“But why? I thought the Mortgage rates were tied to the Fed rate”

When the Fed cuts rates it has specific impact on these and more:

• Money Market accounts
• Short term Treasuries
• Credit cards
• Car loans
• Personal loans
• Small Business loans

What you don’t see on the list is mortgage rates, which are tied to Mortgage-Backed Securities (MBS) or, more specifically, the 10-year Treasury bond.

The Federal Reserve’s actions encourage money managers to buy bonds now, anticipating future rate cuts. For instance, a bond purchased today might offer a 10-year Treasury yield of 4.18%, guaranteed, as opposed to waiting until next year when rates could be 1.50% lower due to the Fed’s reductions.

It’s a delicate balance, and historically, October tends to be a challenging month for mortgage rates.

I was considering adding a more technical bond chart, but then I thought, why not a picture of a cute cat instead? And after some more thought, I figured, why not go with something more personal—a bit of a self-portrait, in a way.