I’m hearing this a lot right now:
“JAY! THE RATES!! WHAT THE HECK?!”
Usually followed by: “Wait… you told me mortgage rates improved by 1.75% since last October. The Federal Reserve just CUT rates by 0.50%, and they’re signaling another cut coming… and now you’re telling me mortgage rates went UP by 0.75%?! Are you kidding me?!”
Nope. Not kidding. That’s exactly what happened.
The Big Misconception
Let’s clear something up—again (because I’ve been saying this for years):
The Federal Reserve does NOT directly control mortgage rates.
I know… it feels like they should. But they don’t.
Mortgage rates are driven primarily by the bond market—specifically mortgage-backed securities—and those are influenced by a wide range of factors: investor behavior, inflation expectations, global events, and overall economic sentiment.
So when rates move in a direction that feels backwards, it’s not because something is “broken”… it’s because the market is reacting to something deeper.
So Why Did Rates Go Up?
Short answer: there’s no single, clear reason.
Longer answer: there are several possible factors at play:
- Market uncertainty (including election anticipation)
- Investors repositioning in the bond market
- Concerns about long-term economic stability
- General market corrections after a strong downward trend
From my 26 years in this business, I’ve seen this pattern before:
When rates improve quickly over a short period of time, a sudden spike often follows—then things settle back into a gradual improvement trend.
Think of it like a “reset” or correction in the market.
A Bigger Concern Lurking in the Background
There’s also growing conversation among independent economists about the federal budget deficit, which has ballooned significantly.
The big question being asked:
“How does that get paid?”
At the end of the day, the answer is simple—we all pay for it. Typically through taxes.
There’s even discussion about potential future policies like taxing unrealized gains on real estate annually (not just when you sell). If something like that were ever implemented, it could have major ripple effects across the housing market.
For now, it’s something to watch—not panic over—but definitely stay informed about.
So… What Now?
Here’s the part that often gets lost in the noise:
Most independent market analysts still believe mortgage rates will trend lower over the next two years.
That’s important.
Yes, we just saw a spike.
Yes, it feels frustrating.
But the long-term outlook hasn’t fundamentally changed.
The Real Opportunity
If you’re waiting for the “perfect moment,” you might be waiting forever.
Because here’s the reality:
- Rates go up → less competition
- Rates go down → more buyers flood the market
- More buyers → higher home prices
So while everyone is focused on rates, inventory and competition are just as important.
Final Thought
If you need a home, don’t let short-term noise derail a long-term decision.
The market will always move. Headlines will always react.
But the fundamentals of homeownership—and the opportunities that come with it—are still very real.
Ignore the chaos. Stay focused on your goals. And if the timing is right for you… go buy a home.
Cheers,
Jay Atterstrom
📧 [email protected]
📞 (214) 377-0033