Why Mortgage Rates Don’t Always Mirror Fed Cuts: Analyzing 15 Recent Fed Funds Rate Reductions and Their Immediate Impact on Mortgage Rates

Here are the last 15 times the Federal Reserve cut the Federal Funds Rate, along with the dates:

1. March 16, 2020 — Emergency cut to 0%–0.25% range due to the COVID-19 pandemic (100 bps).

Day of the cut avg 30 year fixed went from 4% to 3.63%. The following day they dropped again to 3.45%. March 18, they shot all the way up to 4.13%.

1. March 3, 2020 — Emergency cut by 50 bps due to growing concerns over the economic impact of COVID-19.

The Day of the cut rates went up by .06%. On March 5th they decreased by .03%

1. October 31, 2019 — Cut by 25 bps.

Rates went from 3.84% to 3.71%. The following day they went to 3.72%

1. September 19, 2019 — Cut by 25 bps.

On Sept 19 rates decreased from 3.8 to 3.77% and then increased to 3.79% the following day.

1. Aug 1, 2019 — Cut by 25 bps, marking the first cut since the financial crisis.

Rates decreased from 3.85% to 3.77% on Aug. 1. The following day they went 3.7%

1. December 16, 2008 — Cut to a target range of 0%–0.25%, during the Global Financial Crisis.

Rates went to 5.18 from 5.16 on December 16, 2008. The following day they went to 5.20%

1. October 29, 2008 — Cut by 50 bps.

Rates went from 6.17% to 6.08% on the day of the cut. The following day they corrected to 6.12%

1. October 8, 2008 — Emergency cut by 50 bps.

 Rates went up from 6.13% to 6.15% on the day of the cut and remained flat the following day.

1. April 30, 2008 — Cut by 25 bps.

Rates increased from 5.99 to 6.02% on the day of the cut and down to 6.01% the following day.

1. March 18, 2008 — Cut by 75 bps.

Rates remainded flat on the day of the cut at 5.96% and increased slightly to 5.98% on March 19th.

11.  January 30, 2008 – Cut by 50 bps.

 Rates dropped on the day of the cut to 5.73% from 5.71%. The following day they went back up to 5.75%

12.  January 22, 2008 – Cut by 75 bps.

 Rates went up the day of the cut from 5.63% to 5.68%. The following day they climbed to 5.73%

13.  Dec. 11, 2007 - Cut by 25 bps.

Rates remained flat on the day of the cut at 6.03%. The following day they decreased to 6.01%.

14.  Oct. 31, 2007 - Cut by25 bps.

 30-year fixed rates increased the day of from 6.22% to 6.26% and down slightly the following day to 6.25%

15.  Sept. 18, 2007 – Cut by 50 bps. The beginning of the GFC cuts

Mortgage rates increased every so slightly from 6.39% to 6.4% on the 18th. On the following day they dropped back down to 6.35%

Source: Forbes and Mortgage News Daily

To sum up, rates decreased on 6 days following a rate cut, increased on 7 days, and stayed unchanged on 2 days.