A more important benchmark is the yield on 10-year U.S. Treasury notes.
That yield reflects what investors demand for locking in money long-term — and mortgage lenders often tie their rates to it.
Inflation, or expectations about future inflation, plays a big role. If investors think inflation will stay high, they’ll insist on higher long-term yields. That pushes mortgage rates up, even if short-term Fed rates are falling.
The Fed does have tools that can help lower mortgage rates like buying mortgage-backed securities, or stopping reducing its holdings of them, but they come with risks, like stoking inflation or disrupting parts of the bond market.
So while Fed policy matters, mortgage rates are really the sum of many forces — not just what the Fed does next.