From Jan. 3, 2001, to June 25, 2003, the Federal Reserve reduced its target for the federal funds rate 13 times. However, the average 30-year mortgage rate fell eight times and rose five times. It’s not true that a Fed rate cut automatically leads to a drop in fixed mortgage rates. There is zero causation between mortgage rates and the Fed reducing its target for the federal funds rate. Mortgage rates go up and down according to investors’ expectations of long-term inflation. If investors think inflation will accelerate, mortgage rates (and other long-term interest rates) rise. The Mortgage Kit: Select the Right Loan, Lock in the Lowest Rate, Negotiate the Best Terms (Mortgage Kit)

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