If you were waiting for the Federal Reserve meeting to magically fix mortgage rates, you might be feeling a little confused today.
The Fed officially cut the federal funds rate by 0.25% (25 basis points). This is the third consecutive cut we've seen recently.
In a vacuum, that sounds like great news for buyers in Southwest Colorado. Lower Fed rates usually imply lower borrowing costs. But the real estate market doesn't live in a vacuum—it lives in the bond market. And the bond market had a very different reaction.
Here is the data-driven breakdown of what happened and why it matters for your housing strategy.
1. The "Priced In" Problem
Mortgage rates do not move in lockstep with the Federal Reserve. They track the 10-Year Treasury yield, which moves based on future expectations.
The market largely expected this 0.25% cut. It was already "priced in" to the mortgage rates we saw last week. That is why, despite the cut, we aren't seeing a plummet in mortgage rates today. In fact, uncertainty about future policy actually caused mortgage rates to tick up slightly leading into the meeting.
The Takeaway: Don't expect a sudden drop in your quoted rate just because the Fed made a move.
2. The "Hawkish" Signal for 2026
The most critical news for real estate wasn't the cut itself; it was the forecast.
The Fed signaled a more cautious ("hawkish") path forward. Instead of promising a steady stream of cuts, they are now emphasizing that future adjustments depend heavily on incoming data.
Even more telling: The Fed’s updated projections suggest they may only cut rates one time in 2026.
The Takeaway: If you are sitting on the sidelines waiting for rates to drop into the 4s or low 5s next year, you might be waiting a long time. The "date the rate, marry the house" strategy is riskier if the refinance window is further away than we thought.
3. The Affordability Picture
While the immediate gratification isn't there, the long-term trend is still supportive. Rates are significantly lower than their recent peaks.
However, we are seeing a divide at the Fed. This decision wasn't unanimous—three members voted against it. This internal disagreement creates volatility. Volatility makes lenders nervous, and when lenders are nervous, they keep spreads (the difference between the 10-Year Treasury and mortgage rates) wide to protect themselves.
The Takeaway: We are likely settling into a "new normal" for rates rather than heading back to the historic lows of 2020-2021.
Final Analysis
This meeting reinforced what I tell my clients every day: You cannot time the market.
The Fed is moving cautiously. The labor market is softening slightly, which is why they cut, but inflation is still sticky enough to keep them from cutting aggressively.
If you find a home in Southwest Colorado that fits your budget and your life, waiting for the "perfect" rate is a gamble that might not pay off in 2026. The best strategy is to negotiate hard on the price today and treat any future refinance opportunity as a bonus, not a guarantee.
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