What It Means for Mortgage Brokers

This past week, home loan rates moved slightly higher after the Federal Reserve cut the Fed Funds Rate by 0.25%. Sounds backward, right? Let’s break down why — and what it means for your borrowers and pipeline heading into November.

“It’s the same old story, same old song and dance…”
– Aerosmith

The “Hawkish” Rate Cut — Why Rates Rose Anyway

The Fed’s quarter-point cut brought the Fed Funds Rate down to a 3.75–4.00% range.
But instead of dropping, mortgage rates edged higher — a pattern we’ve seen after each of the last four cuts.

Here’s why:
A “hawkish” rate cut signals that while the Fed is trimming short-term rates, it’s still focused on fighting inflation. In other words, cheaper overnight borrowing for banks doesn’t necessarily mean cheaper long-term borrowing for your clients.

When markets sense that the Fed plans to keep rates higher for longer, bond yields jump — and mortgage rates often follow.

Broker Takeaway: Communicate Calm and Strategy

• Set borrower expectations. Many clients assume “Fed cut = lower mortgage rates.” Use this as a teaching moment — explain that mortgage rates are tied to long-term bond yields, not the Fed Funds Rate.
• Stay proactive with locks. Volatility after Fed meetings can shake up rate sheets quickly. If a client is ready, locking before big Fed events often pays off.
• Watch for opportunities. A short-term bump in rates can create reprice windows — helping you catch improving rates once markets settle.

QT Ends December 1 — Why That’s Good News

The Fed also announced it will end Quantitative Tightening (QT) on December 1.
That means it will stop reducing its holdings of Treasury and mortgage-backed securities — a process that’s been draining liquidity from the market.

For mortgage brokers, this could signal stability ahead:

• Ending QT could boost bond demand, helping ease upward pressure on rates.
• It’s a sign the Fed sees financial conditions as tight enough — which may mean a more balanced rate environment heading into 2026.

Rate Check

• 30-Year Fixed: 6.17% (as of October 30, 2025)
• 10-Year Treasury: Back above 4.00% following Powell’s comments

For mortgage rates to make meaningful gains, we’ll need to see the 10-Year move solidly below 4.00% — a key technical level brokers should keep on their radar.

Looking Ahead

With limited economic reports expected due to the potential government shutdown, all eyes are on:

• The new ADP weekly payroll report, which could give early labor market clues
• A full lineup of Fed speakers, offering insight into December’s meeting outlook

For now, the message to clients is clear:
Stay informed. Be flexible. And remember — short-term bumps can create long-term opportunities.

Broker Insight

Use this period to reconnect with pre-approved buyers and revisit previously declined deals — rate fluctuations can open new qualification windows.

Acra Lending is here to help structure Non-QM, DSCR, and investor scenarios that make the most of today’s evolving market.

Submit your scenario today to see how current trends can work in your favor.