Mortgage rates were supposed to come down. Instead, they’re rising. Here’s why

You might expect that mortgage rates would be falling right now after the Federal Reserve cut interest rates by a half-point last month.

Instead, mortgage rates jumped higher. The latest data from Freddie Mac showed that the average 30-year mortgage rate had increased to 6.4%, more than a quarter-point higher than it was two weeks ago.

The news is probably an unwelcome surprise to the folks who had been hoping for lower interest rates to finally come off the sidelines and start shopping for a home.

Here’s what’s going on — and what it means for those trying to buy a home now.

The Fed doesn’t set mortgage rates

Here’s the thing: The Fed can influence mortgage rates but it doesn’t set them.

Instead, mortgage rates mainly follow a different number: the yield on 10-year Treasury bonds. That yield has gone up recently for a number of reasons, including because investors are expecting the Fed to be a little more cautious in cutting rates after the jumbo-sized cut last month.

But it’s not just the 10-year Treasury yield influencing mortgage rates.

The mortgage lender needs to cover its costs and make a profit, so it adds its own percentage on top, for example. And the specific mortgage rate that you get will depend on your own factors, like your credit score and the size and type of loan you’re getting.

That said, despite the recent uptick, mortgage rates are still more than a full point lower than they were this time last year, falling as investors anticipated the Fed’s rate cuts and factored those into the 10-year Treasury yield.

The lower mortgage rates compared to a year ago have been good for some homeowners. Lots of people have taken…