If anyone needed more convincing that a Fed rate cut doesn’t guarantee lower mortgage rates, today is great evidence. Maybe “great” is the wrong word. The trend in mortgage rates following today’s Fed rate cut hasn’t been great.

The average loan is at least 0.20% higher than this morning. Lenders are still in the process of adjusting their interest rates, so the total loss could fluctuate slightly until we know the full figures. Either way, the traditional top-tier 30-year fixed rate will easily be back above 7% for the average lender.

What is there?

First of all, the rise in mortgage rates has nothing to do with the Fed cutting rates. This cut was just a small portion of the information released by the Fed today. It was also the most predictable part. When something is predictable in financial markets, it can be traded, and this trading means that longer-term interest rates (like mortgages) can get into position well in advance of Fed rate cuts/hikes.

Additionally, mortgage rates are more important to the Fed’s rate cut/raise prospects than to any single rate cut/raise. That’s where everything started going wrong today. The Fed communicates its outlook four times a year via the Summary of Economic Forecasts and the infamous “dot plot” (a chart showing each Fed member’s opinion of the appropriate Fed funds rate at various points in the future).

Today’s dot chart showed that the median Fed member expects interest rates to be significantly higher by the end of next year compared to the last dot chart three months ago. The chart below shows the new points in blue and the old points in red. The year to focus on is 2025. Note the upward movement from the low 3 percent to the high 3 percent area.

In addition to the points, Fed Chairman Powell expressed a more conservative approach to future rate cuts during his press conference. The bond market (bonds dictate interest rate movements) didn’t like any of this. Yields/interest rates rose at 2:00 p.m. ET when the dot chart was released and continued to rise during Powell’s presser starting at 2:30 p.m.

By 4 p.m., 10-year Treasury yields had risen more than 0.10% – a very large move for a single day. Five-year Treasury bonds, which are currently more similar to the bonds that determine mortgage rates, rose more than 0.13%.

Almost every lender today has “re-evaluated” to higher interest rates at least once. Any lender that has the same interest rates this morning will likely be significantly higher tomorrow morning.