On last week’s Not Your Average Investor Show, Pablo and I talked about the Fed’s long-awaited rate cut. After two years of holding rates high, the Fed lowered the funds rate by 0.25%. The headlines made it sound like the big turning point had arrived.
But based on what really happened: mortgage rates had already dipped about 0.3% in the weeks leading up to the announcement. And by the time the cut became official, rates had actually ticked back up.
It shows how markets rarely wait for headlines; they often move ahead of them.
When the Cut Isn’t the Story
The Fed funds rate now sits between 4.00% and 4.25%, following a quarter-point cut in September. While mortgage rates don’t move in lockstep with Fed decisions, lower policy rates often ease borrowing costs across the economy.
For investors, even a small drop in mortgage rates can translate into extra cash flow that improves your return on investment.
But mortgage rates don’t mirror the Fed’s moves exactly. They respond to broader signals in the market, and those signals tend to appear first. In this case, they already had, which is why the official cut didn’t line up with the lowest rates.
That gap between what’s announced and what’s already happening is worth paying attention to.
👉 Here’s a quick look at why investors saw changes weeks before the Fed made its move:
Where the Real Clues Come From
Mortgage rates don’t move only because of what the Fed announces. The movements in mortgage rates can often be traced back to a few key indicators:
- The 10-Year Treasury Yield. Historically, 30 year mortgage rates have required a premium of 1.7% above the 10 year treasury yield for investors. Right now, the gap is closer to 2.3%. That larger spread hints that mortgage rates may still have room to come down as Treasury demand grows.
- Labor Market Reports. When job growth weakens, inflation pressures usually ease, leading investors to expect looser Fed policy and slower economic growth. That encourages more investment in Treasuries, pushing yields lower—and since mortgage rates track closely with Treasury yields, they often follow downward.
- Inflation Expectations. Persistent inflation keeps borrowing costs elevated as the Fed holds rates higher and bond investors demand greater yields. By contrast, softer inflation eases pressure on the Fed and the bond market, creating conditions that often allow interest rates—including mortgage rates—to move lower.
Signals like these don’t just explain the past, they hint at what could happen next.
👉 Here’s what those signals look like:
The Quiet Shifts Already Underway
Mortgage rates today hover around 6.3%–6.4%. That’s better than the 7%+ range we saw earlier this year, but still above the level where housing activity really picks up. Many believe crossing below 6% could be the tipping point.
In the meantime, smaller changes are already shaping the market:
- Refinance applications surged 60% in a week. Refinance applications typically are the first wave of mortgage applications to spike when interest rates ease.
- Cash flow is improving. Current JWB inventory is already showing $200+/month in cash flow.
- Equity is opening up. Investors can refinance responsibly and redeploy equity without adding new cash out of pocket.
For rental property investors, these shifts mean their investments provide more positive cash flow in the short term and still are in line for long-term growth. The best part is that this quietly creates the conditions for even stronger cash flow and growth when rates move further.
Not Your Average Insight: The Market Signals Are Hiding in Plain Sight
When decisions are structured around signals, investors tend to move with more confidence. That’s how JWB clients are finding room to improve cash flow now, responsibly refinance equity, and position their portfolios for appreciation over time. It’s less about reacting to noise and more about paying attention to the quiet cues the market is already giving.
Read the signals the market openly gives you and use them to build steady results.
Just remember… Don’t Be Average!