The federal funds rate fell 170 basis points. The 30-year mortgage rose anyway — the data show why.

From September 2024 through 2025 the Federal Open Market Committee lowered its target range by 175 basis points over six rate cuts [verified, FOMC target-rate history]; the federal funds effective rate fell from 5.33% in August 2024 to 3.63% in August 2026, a decline of 170 basis points. [verified, FRED FEDFUNDS] A homebuyer who locked in a 30-year fixed mortgage the week of the first cut, September 18, 2024, paid 6.09%, according to the Freddie Mac Primary Mortgage Market Survey. [verified, FRED MORTGAGE30US] As of September 3, 2026, the same survey recorded 6.71% — 62 basis points more than at the moment the easing began. The arithmetic points to the 10-year Treasury yield. Over this window the 30-year mortgage moved with that benchmark rather than the federal funds rate, consistent with the standard mortgage-pricing relationship documented by rate trackers such as Bankrate. The 10-year yield rose from 3.69% the week ending September 20, 2024 to 4.68% the week ending August 28, 2026 — a gain of 99 basis points. [verified, FRED WGS10YR] The Fed's rate fell 170; the 10-year rose 99. They moved in opposite directions over the same two years. The gap between a 99-basis-point Treasury rise and a 62-basis-point mortgage rise is the mortgage-to-Treasury spread. That spread — the margin by which a 30-year loan prices above the 10-year benchmark — was 2.40 percentage points the week of the first Fed cut. It was 2.03 percentage points as of September 3, 2026. The spread narrowed 37 basis points; the Treasury rose 99. [verified, arithmetic from MORTGAGE30US minus WGS10YR] For context on how unusual recent spread levels have been: over all 52 paired weekly observations in 2018 (weeks with both a Freddie Mac survey reading and a 10-year Treasury yield), the spread between the two averaged 1.63 percentage points. The 2021 full-year average from the same paired-weekly series was 1.51 percentage points. The spread peaked at 3.13 percentage points the week of June 1, 2023, when the Freddie Mac survey recorded 6.79% against a 10-year Treasury of 3.66% — the widest margin of the rate-hiking cycle. The 2.03 as of that date sits well below that peak and above the 2018 and 2021 baselines. [verified, computed from FRED MORTGAGE30US minus WGS10YR] The most recent 2026 low came the week of February 26, when the Freddie Mac survey recorded 5.98% and the 10-year Treasury stood at 4.02%, a spread of 1.96 percentage points. Since then, both the Treasury and mortgage rate have risen.

The following is analysis, not fact. The arithmetic separates what the Fed controls from what it does not. The federal funds rate is a short-term overnight benchmark; the 10-year Treasury yield is set in a separate bond market that responds to inflation expectations, the growth outlook, and investor demand for long-dated government debt ^sspeculative. In the rate-easing cycle since September 2024, those two yields moved in opposite directions — and because 30-year mortgage loans price primarily off the long end rather than the short end, the Fed's cuts exerted little direct downward pull on the rate that homebuyers pay ^sspeculative. The mortgage-to-Treasury spread has moved in homebuyers' partial favor. Compressing from 3.13 percentage points at its June 2023 peak to 2.03 percentage points as of September 3, 2026, the spread has given back 110 basis points of the premium that opened during the 2022–2023 rate-hiking cycle ^sspeculative — a move consistent with a gradual recovery in secondary-market conditions ^sspeculative. At the 10-year yield of 4.68% that week and the 2018 annual average spread of 1.63 percentage points, the arithmetic-implied 30-year rate would be 6.31%. The recorded rate of 6.71% exceeds that by 40 basis points — the same 40-basis-point gap by which the September 3 spread (2.03 pp) exceeds the 2018 average (1.63 pp). The spread has narrowed relative to those benchmarks; the Treasury has simply moved faster in the other direction. The net effect on the homebuyer is the number that matters: 6.71%.

The mortgage-to-Treasury spread at 2.03 percentage points, as of September 3, remains 40 to 52 basis points above the 2018 and 2021 full-year averages of 1.63 and 1.51 percentage points — meaning mortgage-specific costs are still elevated relative to pre-2022 norms even after substantial compression from the June 2023 peak. Wolf Richter at Wolf Street, writing September 3, 2026, argued that Fannie Mae and Freddie Mac's accelerated MBS buybacks since January 2026 may be holding the spread near 2 percentage points rather than allowing further widening — and that without those purchases the spread could be higher. If that reading is correct, the spread improvement visible in the data may partly reflect GSE market intervention rather than organic normalization, and removing that support could widen the spread again. From the opposite direction: the 10-year Treasury yield is not fixed. If inflation settles further or economic conditions soften, long-end yields could fall and pull mortgage rates lower without any further spread compression. That outcome is not something either FRED series can project.