Rates were cut.
Why didn’t my payment move?
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The news says: rates are cut. You open your banking app and check your mortgage. Your monthly payment hasn't moved a cent. Is the bank dragging its feet, or does the cut have nothing to do with you? Let's follow this one rate cut on its trip. And count the stops before it reaches your payment. Stop one: the central bank. What it changes isn't your mortgage. It's the price it charges banks for very short loans, the kind repaid in seven days.
Think of it as the wholesale price at a market. When wholesale drops, the stall prices don't change that same day. Stop two: the twentieth of every month. About eighteen banks each submit a price. Drop the highest and lowest, average the rest. That's the benchmark for home loans, the LPR in the news. When banks quote, they start from that short-term price. Then add their own costs and risks. So the benchmark sits a little over two points higher. Lately it's been three point five, unchanged for over a year.
Stop three: your contract. Your rate starts with the benchmark. Then plus or minus a small slice, called the spread. That slice is fixed the day you sign. What decides the slice? Your city, and whether it's your first home or second. And how the bank sees you: steady income, a record of paying on time. So on the same day, two people can get different rates. Stop four: waiting for a date. When the benchmark falls, your existing loan doesn't follow right away. It waits for the date in your contract. For most people that's January first. It resets to the previous December's benchmark.
So a cut in March? Your payment may not shrink until next January. Open the app on the day of the cut, and of course nothing's changed. There are exceptions. In October 2024, the big banks lowered that slice on most existing mortgages all at once. About half a point on average, no application needed. America is even stranger. Most loans there are fixed for thirty years. They track what the government pays to borrow for ten. In fall 2024 the Fed cut by a full point. Mortgage rates rose anyway, from 6.09 to 7.04.
So a mortgage rate isn't a number the central bank simply announces. It's stacked up stop by stop: the central bank's short-term price, the banks' benchmark with their costs added. Then your own slice, and finally a date to wait for. Many people think mortgages drop the day rates are cut. In fact the cut has four stops to make. Who did you used to think set your mortgage rate?
The news says “rate cut.” Your payment: unchanged.
Is the bank dragging its feet, or does the cut have nothing to do with you?
Let’s follow one rate cut. It has four stops to make before it reaches your payment.
The central bank moves a 7-day price
China’s central bank doesn’t set your mortgage. It sets the price it charges banks for very short loans, repaid in seven days. Right now that price is 1.4%.
Think of a wholesale market: when wholesale drops, stall prices don’t change that same day.
On the 20th, banks post a benchmark
About eighteen banks each submit a price. Drop the highest and lowest, average the rest: that’s the benchmark for home loans, called the LPR (Loan Prime Rate) in the news.
Banks add their own costs and risks on top of the short-term price, so the benchmark sits a little over two points higher. In September 2026 it was 3.5%, unchanged for over a year.
The slice locked into your contract
Your rate = the benchmark, plus or minus a small slice. That slice is fixed the day you sign.
So on the same day, two people can get different rates. Juggling several debts? Pay the high-interest one first.
Waiting for the date in your contract
When the benchmark falls, an existing loan doesn’t follow right away. For most people the contract says January 1 each year, reset to the previous December’s benchmark.
A cut in March may not shrink your payment until next January. Check the app on the day of the cut, and of course nothing’s changed.
Since November 2024, borrowers can ask their bank to shorten this cycle, to as little as every 3 months.
October 2024: slices cut across the board
China’s big banks lowered the slice on most existing mortgages all at once, by about half a point on average, with no application needed. A rare case of not waiting for the date.
In the US, rates were cut and mortgages rose
Most US mortgages are fixed for 30 years and track what the government pays to borrow for ten. In fall 2024 the Fed cut by a full point, yet the average 30-year rate climbed from 6.09% to 7.04%.
A number built stop by stop
A mortgage rate isn’t a number the central bank simply announces. It’s the central bank’s short-term price, plus the banks’ costs to make the benchmark, plus your own slice, and then a date to wait for.
Quick check
Rates were cut in March. Why do many payments not drop until next January?
The cut has four stops, and the last one is waiting for the contract date, January 1 for most people.
