By Aarthi Swaminathan
Homeowners and buyers can still beat high rates with two specific moves
The 30-year mortgage rate jumped nine basis points higher on Monday, a move considered to be unusual in light of an expected upcoming rate cut by the Federal Reserve.
Mortgage rates are rising sharply even though the Federal Reserve is expected to cut interest rates later this week.
That’s contrary to how rates traditionally have moved ahead of anticipated Fed cuts. Typically when the Fed is expected to keep cutting rates, financial markets factor in the move, and traders then push the 10-year Treasury BX:TMUBMUSD10Y down. When the 10-year moves downward, the 30-year mortgage rate often falls in tandem.
But on Monday, the 30-year mortgage rate jumped nine basis points to 6.36%, the highest level in two weeks, according to Mortgage News Daily.
That increase comes in spite of the high likelihood of the Fed cutting rates at its meeting on Wednesday.
The 10-year, and by extension the 30-year, are “not behaving as [they] traditionally would,” Jeffrey Ruben, president at WSFS Home Lending, a Northeast-based mortgage lender, told MarketWatch.
Why the surge in mortgage rates is so unusual
The 10-year Treasury jumped to 4.17% as of 3:30 p.m. Eastern on Monday, with the 30-year rising in tandem.
The increases may be due to a couple of key reasons.
Ruben said that the bond market may be trying to assess the Fed’s next move following the December rate cut, with inflation potentially still being a problem for the U.S. economy.
Related: Inflation didn’t get any worse before the government shutdown. The Fed is expected to cut rates again.
Traders may also be factoring in the likelihood that the Fed will stop cutting rates for the time being after December, unless the economy takes a sharp turn.
Financial markets expect the Fed to stop cutting when its interest rate falls closer to 3%, which is seen as a normal rate. Looking at the Fed’s longer-term “dot plot” forecast for where rates could be headed, we are getting closer to that 3% range, Robert Tipp, head of global bonds at PGIM Fixed Income, told MarketWatch.
Right before the Wednesday meeting, the Fed’s effective rate was 3.88%, according to the Board of Governors of the Federal Reserve System.
Fed rate cuts not translating to lower mortgage rates
The jump in rates runs contrary to what the Trump administration hopes to achieve with a Fed rate cut. President Donald Trump has repeatedly pressured Fed Chair Jerome Powell to cut rates in an attempt to reduce borrowing costs and also reignite the housing market.
High housing costs have been a problem for the Trump administration since it came back into office. Rising home prices and mortgage rates in recent years have stalled the housing market, as people can’t afford to buy homes at current prices.
Many homeowners have also been waiting for an opening to refinance their mortgage and bring down their monthly payments, at a time when their other cost-of-living expenses are also rising, from groceries to health- and home-insurance premiums.
Thus far, lower mortgage rates remain elusive. Despite multiple rate cuts by the Fed over the course of 2025, it has been nearly three years since the 30-year dipped below 6%, according to Mortgage News Daily data.
In fact, over the span of 2025, the 30-year did not fall below 6% at all. Its lowest point was in September and October, when it fell to 6.13%. The last time the 30-year fell below 6% was in February 2023, when it dropped to 5.99%.
Two mortgage moves homeowners can make right now to beat high rates
Against this difficult environment, what’s a good move to make right now with one’s mortgage that can actually lower one’s monthly housing costs?
Ruben suggested people look at adjustable-rate mortgages, which come with considerably lower rates, if they’re unable to afford the 30-year fixed-rate mortgage rate. The average contract rate for a 30-year fixed-rate mortgage was 6.32% as of Nov. 28, according to the Mortgage Bankers Association, but the five-year ARM rate was just 5.4%.
Though these loans are considered to be risky by some, they’re also a way for borrowers to mitigate the longer-term outlook for mortgage rates, Ruben said. With rates expected to fall in the medium term, home buyers can get into the door with a lower rate at first, and when rates drop, they can refinance into a lower, fixed-rate mortgage, he said.
Homeowners can also lower their mortgage rates by asking their lender for a rate adjustment. Some lenders offer rate modifications as an alternative to refinancing their loan by simply adjusting or amending the interest rate on their current mortgage without changing any of the other terms. There is also no impact on the borrower’s credit.
The incentive for the lender to do so is because it keeps the loan with them, instead of running the risk of the homeowner refinancing with another lender.
Read more: This mortgage hack could save you thousands a year – and it’s not a refinance
– Joy Wiltermuth contributed.
-Aarthi Swaminathan
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12-08-25 1640ET
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