The Federal Reserve has cut rates three times this year.
Inflation’s cooled from 9% to under 3%.
So why is your mortgage rate still above 6%?

Here’s the truth.

The Fed doesn’t control your mortgage rate.

The Fed sets something called the federal funds rate — that’s the short-term rate banks charge each other for overnight loans.
When they cut that rate, things like credit cards, car loans, and business lines of credit get cheaper pretty fast.

Mortgages? Not so much.

They’re long-term loans — 15 to 30 years — and lenders don’t base them on short-term moves. They’re tied to the 10-year Treasury bond, which reflects what investors think the economy will look like for the next decade.

Right now, that bond yields about 4.2%.
Yet mortgage rates are sitting above 6%.

That difference is called the spread — basically, the markup lenders charge to cover costs and risks.

Think of it like a restaurant markup.

A restaurant buys ingredients at wholesale, sells them to you at retail, and uses the difference to cover rent, staff, spoilage, and profit.
Lenders do the same thing — they “buy” money at Treasury rates, then “sell” it to borrowers with a markup.

Normally, that markup runs 1.5–2%.
Right now, it’s closer to 3%.
That extra cushion is what’s costing you.

Why the spread’s so wide right now:

1. Inflation isn’t gone — it just moved.
   Rents are still climbing, insurance premiums are surging, and services like childcare and healthcare keep outpacing wages.
   Lenders see those numbers and price in risk that inflation could flare back up.

2. The Fed stopped buying mortgage-backed securities.
   During the pandemic, the Fed was the biggest buyer in the room, which kept rates low. Now, private investors set the tone — and they want higher returns for the same level of risk.

3. Uncertainty rules everything.
   Geopolitics, national debt, and a choppy housing market make investors nervous. Nervous investors demand bigger markups.

So when do rates come down?

Not until three things happen:

• Inflation truly stabilizes

• The Fed signals stronger support

• Investors feel safer about the economy

None of those boxes are checked yet.

For context: today’s 30-year fixed is around 6.3%.
That feels high after the 3% pandemic lows — but historically, the 50-year average is around 7.7%.
And remember: rates in the early 1980s topped 18%.

The takeaway:

Stop waiting for the 3% era to return.
That world’s gone.

Instead, make decisions based on the market we actually live in:

• If you’re buying, adjust your budget or explore new areas.

• If you’re refinancing, don’t hold out for “the bottom” — wait for the right window.

The market you’re in is the market you’ve got.
Play the hand — and play it smart.