Mortgage rates effectively unchanged ahead of Fed announcement

Mortgage interest rates have had a much quieter week compared to last week. Monday brought a modest drop compared to last Friday, and today’s rates are effectively unchanged.

Although the average lender is still noticeably higher compared to the first few days of the month, this resilience helps prove that interest rates are not eager to revisit the higher levels seen for most of November.

Volatility may rise tomorrow afternoon after the Fed’s interest rate announcement. As a reminder, the Fed does NOT set mortgage rates, and a Fed rate cut does NOT mean that mortgage rates will drop by a corresponding amount – if at all.

The market is already well aware that the Fed is cutting interest rates tomorrow, and these expectations are already 100% reflected in the mortgage rates available today.

If interest rates rise or fall tomorrow, it will be due to other components of the Fed announcement, such as the Fed’s quarterly interest rate outlook survey (official dot plot in the Summary of Economic Projections, released at the same time as the interest rate announcement at every other Fed meeting) or the press conference with the Fed chairman Powell, beginning 30 minutes after the rate announcement.