Interest rates are going down. But mortgage rates are going … up?

Interest rates are going down - but aspiring homeowners waiting for lower mortgage rates aren’t feeling relief.

For years, wannabe buyers have waited for the Federal Reserve to lower rates after the central bank pushed them to the highest level in decades. People who bought houses at high rates are also eager for borrowing costs to simmer down so they can refinance and get lower payments.

Yet the Fed’s move to start cutting rates has not sent mortgage costs down. Instead, the 30-year fixed-rate mortgage has ticked up for the last five weeks, clocking in at 6.72 percent at the end of October, according to the mortgage-finance company Freddie Mac. That’s higher than when rates were slightly above 6 percent around the Fed’s last meeting in September.

“We’re waiting for the shoe to drop, and it’s just not dropping,” said Mike Kemp, who bought his roughly $700,000 home last November and is eager to refinance his 7.25 percent mortgage.

Kemp isn’t alone; the housing market continues to befuddle economists and policymakers who expected high rates would slow buyer demand and cool the entire economy. Instead, the economy is forging ahead: Inflation is still easing. Employers are still hiring (barring a sharp slowdown last month because of strikes and hurricanes). GDP also continues to grow, handing a booming economy to the winner of this week’s presidential election, where housing affordability issues have been front and center.

This week, the Fed is expected to give the economy a bit more juice with a quarter-point rate cut. That would be a less aggressive move than the half-point cut from the last time officials gathered, when they feared the job market was slowing too much. If all goes as Fed watchers predict when policymakers wrap up their two-day meeting on Thursday, the central bank’s benchmark rate would sit between 4.5 and 4.75 percent.

In a speech last month, Fed Governor Christopher Waller said a recent string of strong data suggested “the economy may not be slowing as much as desired” and that as data continues coming in, the central bank might lower rates more slowly than officials thought last month.

The Fed’s own forecasts still show a gradual decline in rates through the rest of 2024 and 2025. But in the near term, experts don’t see mortgage rates inching down by much. Economists also note that the mortgage market doesn’t only depend on the Fed’s benchmark rate; it also moves with the 10-year Treasury. That rate rises when investors forecast momentum ahead.

“The economy continues to grow faster than expectations,” said Sam Khater, chief economist at Freddie Mac. “And what’s sort of puzzling is, why have expectations not adjusted to the economic reality on the ground?”

A flurry of refinancing applications followed the Fed’s September meeting, but that has slowed, too, as mortgage rates stay elevated. Data released last week from the Mortgage Bankers Association showed that the refinance share of mortgage activity dropped to around 43 percent of total applications, down from almost 46 percent the prior week.

At a September news conference, Fed Chair Jerome H. Powell noted that much of the housing market is “frozen” because people with low rates don’t want to sell their homes and take on a higher rate. Powell said there just isn’t enough housing to go around but that “as we normalize rates, you’ll see the housing market normalize.”

“By getting inflation broadly down and getting those rates normalized and getting the housing cycle normalized, that’s the best thing we can do,” Powell said.

But that hasn’t happened yet - which means Kemp is still waiting for lower rates in Phoenix. The general manager of an automotive repair facility bought a home last year thinking he would be able to refinance quickly once the Fed began to cut, to achieve some crucial financial wiggle room. Instead, he and his wife are “financially strangling” themselves to pay $5,400 on their home every month, on top of groceries and other bills.

Steve Walsh, president of Scout Mortgage in Scottsdale, Arizona, said some of his clients have decided not to buy in the current market because they can rent each month for less than a mortgage. Just in the last month or so, rising mortgage rates have translated to around $500 per month a on typical home, he said.

“For a lot of people, that’s a big jump,” Walsh said.