Why the Federal Reserve's interest rate cut is "a lonely drop" for mortgage rates?

The Zhitong Finance APP noted that the recent interest rate cuts by the Federal Reserve have provided some relief for credit card, personal loan, and auto loan borrowers, but with mortgage rates continuing to rise, homebuyers are unlikely to get a breather. After Trump won the presidential election, the 30-year fixed mortgage rate briefly surged, closing at 6.98% as of Thursday. Since September of last year, the Federal Reserve has cut the benchmark rate a total of 0.75%, including a 25 basis point cut announced on Thursday, but mortgage rates have still risen by nearly 1%. Why Mortgage Rates Keep Rising Although mortgage rates typically move in sync with the Federal Reserve's benchmark rate, they have a more direct relationship with the yield on the 10-year U.S. Treasury bond. These yields tend to rise when investors anticipate stronger economic growth and higher inflation—even if the Federal Reserve is cutting the federal funds rate. "Since mid-September, a series of economic data reports have shown that the economy is stronger than expected," said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. "When people have jobs and are making money, they spend, and that drives inflation." The rise in mortgage rates also reflects market expectations that "President-elect Trump will accelerate the growth of the budget deficit faster than Vice President Harris," said Michael Nourmand, president of Los Angeles brokerage Nourmand & Associates. He believes that the tariffs on imported goods proposed by Trump could also drive inflation by raising prices. According to forecasts from major mortgage institutions and industry associations, mortgage rates are expected to decline slightly in the coming months but may still remain around 6% by 2025, nearly double what it was three years ago. If the Republican Party gains control of both the presidency and Congress, reduced barriers to new spending could push bond yields higher, as investors anticipate increased borrowing and inflation risks. Nourmand stated that in either scenario, "sustained deficit spending, coupled with discussions of additional tariffs on imported goods, is likely to keep mortgage rates elevated throughout the remainder of 2024."