If you were watching the headlines Wednesday, you probably saw the big news: The Fed lowered interest rates. Cue the happy dance, right? Cheaper mortgages for everyone! Well… not so fast.

I’ve had several clients and friends ask me: “Liz, if the Fed just cut rates, why didn’t mortgage rates take a nosedive?” Great question — and the answer is a mix of economics, market psychology, and a dash of “that’s not how it works.”

The Fed Doesn’t Control Mortgage Rates (Directly)

Here’s the thing: the Federal Reserve sets the federal funds rate, which is the overnight lending rate banks charge each other. It influences short-term borrowing (think credit cards, car loans, home equity lines of credit). Mortgage rates, however, dance to the beat of a different drum: they’re tied more closely to the bond market and specifically, the 10-year Treasury yield.

So, while the Fed’s move can push markets in a certain direction, it’s not a direct lever on your 30-year fixed mortgage.

Markets Already “Priced It In”

Think of Wall Street like that one friend who always reads the spoilers before watching a movie. Investors knew a Fed cut was coming and had already adjusted mortgage rates ahead of time. By the time the official announcement hit, the market yawned and said, “We saw that coming.”

Inflation Is Still the Boss

Mortgage rates are super sensitive to inflation. If investors think inflation will stick around, they demand higher returns (aka higher rates) to lend money. Even if the Fed trims its rate, if inflation expectations don’t budge, mortgage rates may not either.

The “Mood” Matters

Financial markets can be moody — almost like teenagers. If investors are nervous about the economy, global conflicts, or jobs data, mortgage rates might rise or hold steady despite the Fed’s best efforts. Confidence plays a bigger role than most people realize.

So What Does This Mean If You’re Thinking About Buying or Selling?

• Buyers: Don’t sit on the sidelines waiting for a magical mortgage rate crash. Rates will move, yes, but timing the bottom is like trying to buy Apple stock in 2003. The best time to buy is when you find the right house that fits your life and budget.

• Sellers: Good news — the market is still moving. A well-priced home in Northwest Indiana will attract buyers, especially with inventory staying tight.

The bottom line? The Fed lowering rates doesn’t guarantee mortgage rates will follow — at least not overnight. But here’s what I do know: real estate is about playing the long game, and locking in a home you love (with a mortgage you can manage) beats chasing headlines.

So, if you’re wondering whether now is your time to make a move, let’s talk strategy. Rates may play hard to get, but the right home won’t wait forever.