Do Fed Rate Cuts Cause Longer-term Rates to Rise?

Recent headlines stress that mortgage rates rose after the Fed cut - but the reality is more complex and often misunderstood. In this deep dive, Barry Habib explains why markets often move before the Fed acts, and what truly drives interest rates.

The Fed made its first rate cut of the year amid rising concerns about the job market. Meanwhile, homebuilders remain cautiously optimistic about the future, even as new construction activity slowed.

The first rate cut of 2025 was both well-telegraphed by the Fed, and anticipated by the markets. Average mortgage rates are at their lowest levels in a year, and are only 20–25 basis points (0.20%-0.25%) from being at their lowest levels in 3 years! Summer may be over, but these lower mortgage rates are definitely going to heat up transaction activity — if they can last.