If You're One of Those People Asking How Much Lower Your Mortgage Rate Quote is After Fed Day, This is Required Reading

It's day two of mortgage rates surging higher--now back to the highest levels in 2 weeks (the day before the September 5th jobs report). The juxtaposition of yesterday's Fed rate cut and the sudden mortgage rate spike is incredibly confusing to most of the population, so let's clear it up. SHORT VERSION:   The Fed Funds Rate (FFR) doesn't dictate mortgage rates The FFR only changes on Fed announcement days, 8 times a year.  It changes in response to various economic reports and events. Mortgage rates change daily and the bonds that drive mortgage rates change in real-time throughout the day.  That means mortgage rates can drop for all the same reasons that drove yesterday's rate cut. Because those reasons were already in play well before yesterday, mortgage rates had already responded to them well before yesterday. Bottom line: the Fed Funds Rate and mortgage rates dropped for the same reasons, but mortgage rates got to do it sooner because they move more nimbly.  LONG VERSION: We've written and re-written the long version too many times to count.  Here is one of the most evergreen examples: https://www.mortgagenewsdaily.com/markets/mortgage-rates-09212022 SPECIAL NOTE REGARDING OTHER NEWS STORIES SAYING RATES ARE LOWER: There are an unfortunate number of news articles out there today that claim mortgage rates are LOWER.  This is due to Freddie Mac's weekly rate survey dropping to 6.26 from 6.35 last week. Freddie's rate is an average of the 5 days ending yesterday, so 80% of the input is comprised of the lowest rates in a long time.  News organizations then quote the survey and give the impression that this week's rates are lower than last week's.