O
n Tuesday, mortgage‑backed bond investors rushed in, pushing the average 30‑year fixed‑rate down 12 basis points to 6.13%—the lowest level since late 2022, according to Mortgage News Daily. The dip follows expectations of a Federal Reserve rate cut, echoing the market reaction seen in September 2024 when rates fell before the meeting and then rose after the cut. Matthew Graham, COO of Mortgage News Daily, cautions that a post‑cut rise is possible but not assured.

    Willy Walker, CEO of Walker & Dunlop, highlighted historical patterns. He notes that during the nine Fed rate‑cut cycles since 1980, cuts made in recessionary periods pulled the long‑end of the yield curve down, whereas cuts in non‑recessionary times had little effect on long‑term rates. Walker predicts at least two 25‑basis‑point cuts this cycle, with the short end potentially dropping 50 basis points, but the long end should remain largely unchanged.

    Walker also believes current yields are well below where they will be in two to three weeks. He suggests investors may buy on rumors and sell on the actual announcement, expecting a modest 10‑year sell‑off after the Fed declares a 25‑basis‑point cut.

    The shift underscores the market’s anticipation of a Fed rate cut, yet historical data suggest the reaction can be counterintuitive. CNBC’s Property Play newsletter highlights such patterns for investors. Walker notes that the short‑term yield could fall 50 basis points, while the long‑term curve stays flat.