Spotlight: Why Mortgage Rates Rose After the Fed Cut 🔦
Despite the Federal Reserve cutting its short-term overnight rate last week, mortgage rates moved higher. Let’s dive into this counterintuitive reaction. ⤵️
Mortgage Rates went up because Bond Yields went up. Why?
“Sell the news” reaction – Investors had priced in the Fed cut weeks in advance. Once it happened, many sold bonds to lock in profits, pushing yields up.
Inflation concerns – With inflation still above the Fed’s 2% target, bond investors demanded higher yields to compensate for the risk of eroding purchasing power.
Growth expectations – Some read the cut as a signal the Fed is confident in growth, which increases demand for capital and nudges yields higher.
Government deficits – More Treasury issuance to cover deficits adds supply, pushing long-term yields higher.
Why mortgage rates followed:
Mortgage rates are tied more closely to the 10-year Treasury yield than to the Fed’s overnight rate. When Treasury yields rose after the Fed’s cut, mortgage rates moved higher too, finishing the week around 6.35%.
Outlook:
Near-term: Markets expect two more modest Fed cuts in 2025, but long-term rates may stay elevated if inflation and debt concerns persist.
Longer-term: Forecasts from Fannie Mae, MBA, and NAR suggest rates will gradually trend toward ~6% by 2026, but significant drops aren’t expected soon.
Key takeaway:
A Fed rate cut doesn’t guarantee lower mortgage rates. The bond market drives mortgage pricing, and concerns over inflation, growth, and government debt outweighed the Fed’s short-term easing last week.
The RealTea 🫖
The Fed’s first rate cut of 2025 didn’t deliver lower mortgage rates. Instead, the 10-year Treasury yield climbed and mortgage rates followed higher, as investors weighed inflation and debt concerns. This muted some of the affordability gained nationally, while in Central Ohio, elevated inventory levels give buyers more leverage.
Tailwinds
Federal Reserve cut signals willingness to ease policy
Stock market strength driven by AI enthusiasm and retail sales
Central Ohio active inventory up nearly 70% YoY, giving buyers options
Headwinds
Mortgage rates rose after the Fed cut, hitting 6.35% by week’s end
Bond yields moved higher on inflation and debt worries
Nearly 60% of active listings in Central Ohio have reduced price
TL ; DR 📖
Macro:
🏦 Fed cut rates 25 bps, but mortgage rates went up
📈 30-yr fixed ended the week at 6.35%
📉 Affordability still strained despite strong stock markets
Central OH:
📊 Active inventory ⬆️ 69.1% YoY
💲 Median price $340K, ⬆️ 1.5% YoY
📉 Closings down ⬇️ 3.5% YoY
Macro Update 📊
Stock Market Performance Last Week
S&P 500: ⬆️ 1.59%
Nasdaq Composite: ⬆️ 2.03%
Dow Jones Industrial Average: ⬆️ 0.95%
Drivers:
Renewed enthusiasm for AI and tech stocks fueled Nasdaq gains
Strong August retail sales (+0.6%) showed resilient consumer spending
Investor optimism around the Fed’s September rate cut supported markets
Positive developments on trade talks between the US and China added momentum
30-Yr Mortgage Rates (Mortgage News Daily)
Sep 15 → Sep 16 → Sep 17 → Sep 18 → Sep 19
6.25% → 6.13% → 6.22% → 6.37% → 6.35%
Weekly Avg: 6.26%
Trend: Rates climbed after the Fed cut, closing the week higher.
Mortgage Applications
Last 4 weeks:
163.8 → 158.7 → 169.1 → 174.0
Same period 2024:
144.9 → 141.9 → 143.7 → 147.0
WoW: ⬆️ 2.9%
YoY: ⬆️ 19.1%
Federal Reserve (CME FedWatch)
Current Target: 4.0–4.25%
Next Meeting (Oct 29):
Odds of no cut: 10.2%
Odds of 25 bps cut: 89.8%
Other Indicators
Fear & Greed Index
Current reading: 63 (Greed)
Takeaway: Investor sentiment tilted bullish despite bond market caution.
Truflation Inflation Index:
2.15%
Still above the Fed’s 2% target, supporting caution on long-term rates.
Sentiment on X (Last 7 Days) 📢
National:
Persistent seller’s market from low inventory and rate lock-in
Buyers discouraged: home prices ~5x median income despite rate cuts
Columbus:
More optimism tied to new affordable housing developments
Local affordability squeezed by insurance hikes and funding cuts
Flipper profits hit Great Recession lows
Pull Quote:
"Feeble cuts won’t create frenzy… relief may not come till 2027."
Central Ohio Market Update 🌎📍
Market Dynamics: A Seller’s Market shifting toward Buyer-friendly conditions.
Central Ohio’s story is rising inventory with steady prices. Buyers have more options, but higher rates and longer selling times keep pressure on affordability. Sellers are increasingly relying on reductions to stay competitive.
Stats From the Last 4 Weeks (Aug wk 4 – Sep wk 3, 2025)
Closings: 2,260 ⬇️ 3.5% YoY
New Listings: 2,856 ⬆️ 17.8% YoY
Active Inventory: 5,434 ⬆️ 69.1% YoY, ⬇️ 0.7% WoW
Median Price: $340,000 ⬆️ 1.5% YoY
Price Reductions: 59.5% of active listings
Avg DOM: 28 ⬆️ 21.7% YoY
Months of Supply: 2.4
YTD Snapshot
Closings: 20,452 ⬇️ 0.9% YoY
Median Price: $339,000 ⬆️ 3.6% YoY
Avg $/SF: $213.19 ⬆️ 2.8% YoY
% LP/SP: 98.3% ⬇️ 0.3% YoY
New Listings: 25,396 ⬆️ 13.1% YoY
Showings & Affordability
Question: Where would rates need to be for Franklin County to have an Affordability Index of 100? 🤔
Answer: Assuming a median home price of $340,000 & a median income of $71,680, mortgage rates would need to be at 5.20% to achieve an Affordability Index of 100 - ie, a family with the median income can afford the mortgage payment on a median-priced home. The average weekly Affordability Index for 2025 in Franklin Co. is 91.1. As of June 2025, the National Affordability Index is 94.4 (Source: National Association of Realtors via FRED®).
Franklin County Affordability Index, Last 4 Weeks:
85.0 → 91.7 → 100.7 → 92.9
Same Period 2024:
91.2 → 97.3 → 94.2 → 95.3
⬇️ 3.5% YoY (latest week)
⬇️ 7.7% WoW
Showings per Listing (last 4 weeks):
4.1 → 4.0 → 4.0 → 4.2
Same Period 2024:
6.3 → 6.2 → 6.4 → 6.3
⬇️ 33.9% YoY (latest week)
⬆️ 4.9% WoW
Raw Showings Last 4 Weeks:
22,200 → 21,815 → 21,710 → 22,593
Same Period 2024:
19,535 → 19,535 → 20,536 → 20,209
⬆️ 11.8% YoY (latest week)
⬆️ 4.1% WoW
Local Events This Week 🌎📍
Meetup: Columbus Investors Club
This month’s meetup is all about raising private money and connecting with the right people in the room. You’ll learn from some of Columbus's top operators and see a live pitch demonstration on how to structure and secure private lending.
🕑 Thursday, Sept 25 | 6–8 PM
📍 Ohio Brewing Columbus | 421 East 2nd Ave
🍻 Food & drinks provided | Free parking
🔗 RSVP Here → http://bit.ly/46hGwPP
Agent Training: Real Estate Rendezvous
This month’s Rendezvous is all about learning from fresh perspectives and the success stories of agents who have quickly made their mark. Whether you’re new to the business or a seasoned pro, you’ll walk away with inspiration and actionable strategies! OPEN TO ALL AGENTS!
🕑 Wednesday, Sept 24 | 2-4 PM
📍 Uncommon Studio | 104 E College Ave
🔗 RSVP Here → http://bit.ly/3Kh1llR
Here’s the data:
All data pulled from Columbus REALTORS® Multiple Listing Service (MLS). Central OH is defined as Single-Family, Residential listings from the following Counties - Franklin, Delaware, Licking, Fairfield, Union, Pickaway, Madison, Morrow, Fayette, Athens, Champaign, Clark, Clinton, Hocking, Knox, Logan, Marion, Muskingum, Perry, Ross. Sales figures do not account for seller concessions/credits provided to buyers. Price reductions are defined as a reduction taken at any time during the lifespan of the listing.