Mortgage Rates Jump After Fed Cut Surprises Market

When the Federal Reserve announced a widely anticipated 0.25 percentage point interest rate cut on October 29, 2025, many homebuyers and homeowners hoped for some relief.

The Fed’s move brought its short-term benchmark rate down to a range between 3.75% and 4%, according to USA TODAY.

The explanation, it turns out, lies not in the Fed’s action itself but in the market’s reaction to the central bank’s messaging.

As Bankrate and USA TODAY have documented, mortgage rates also spiked after the Fed’s previous cut in September, despite rates having dipped to yearly lows in anticipation.

Despite the uptick, mortgage rates are still hovering near their lowest levels of the year.

Mortgage purchase applications increased by 5% in the week ending October 24, and overall applications—including those to refinance—rose 7.1%.

The ongoing government shutdown has hit federally backed loan programs particularly hard.

In the meantime, buyers and sellers alike are left to navigate a market shaped as much by psychology and policy signals as by the numbers themselves.