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The Federal Reserve recently cut interest rates to their lowest level in three years, but the real estate world isn’t celebrating just yet. While the move might sound like a win for borrowers, mortgage rates have actually gone up since the announcement, confusing many hopeful homebuyers and investors alike.
On the day before the Fed’s latest rate cut on Oct. 29, 30-year mortgage rates dipped to 6.37%, their lowest in over a year. But the day after the announcement, they had climbed to 6.49% and have held steady since. That increase came even after the Fed lowered its benchmark rate by 0.25%.
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This disconnect is a reminder that the Fed’s rate doesn’t directly control mortgage rates. Instead, mortgage costs are more heavily influenced by the 10-year Treasury yield, inflation expectations, and overall economic conditions.
On Reddit’s r/realestateinvesting community, opinions varied widely. Some dismissed the cut entirely. “Wrong rate cut,” one said, while another pointed out, “Mortgage rates just went up 20 bp after the latest Fed rate cut.”
“People continue to confuse Fed rates with mortgage rates,” a commenter wrote. “Mortgage rates went UP yesterday after the cut. While they can be semi-correlated, they do not move exactly together.”
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Others took a longer view. One investor predicted, “Borrowing will increase, the real estate market will stabilize or rise slightly, and investors will start taking risks again.” But another warned, “Younger people can’t afford the inflated COVID prices boomers will sell their house for. Increased supply will be sitting there and will be lowered after a month or two.”
There were also regional takes. A commenter from Georgia noted seeing constant price cuts: “$5k-$25k cuts to prices every other week.” Meanwhile, in Washington state, another said, “Prices are increasing, no one is dropping prices.”
Some commenters linked the rate cut to broader economic fears. “Lowering rates should raise concern for the economy’s general health,” one said. Others described the current moment as “stagflation,” where inflation stays high while growth slows.
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“The economy is garbage, people are losing jobs while getting eaten alive by inflation the Fed is now choosing to ignore,” a person wrote. “Even with lower rates, a lot of people still won’t be able to afford mortgages.”
Others echoed that sentiment, arguing that even if rates fall further, affordability issues won’t go away. “No one is trading up to a higher rate and more expensive house,” one said. “Home prices need to come down regardless.”
For homeowners, refinancing might still make sense if their current mortgage is in the high 7% or 8% range. The key is whether the lower monthly payments offset the costs of refinancing before they plan to move again.
In the end, even after the Fed’s latest move, real estate activity will likely stay uneven and regional, influenced more by inflation, housing supply, and market sentiment than by the Fed alone.
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This article The Fed Cut Rates To A 3-Year Low, And Real Estate Investors Are Divided. What Does It Mean For Housing And The Economy In 2026? originally appeared on Benzinga.com