Just one day after the Federal Reserve raised its benchmark rate, mortgage rates took a sharp turn lower.

The average rate on the popular 30-year fixed mortgage fell to 5.22% on Thursday from 5.54% on Wednesday, when the Fed announced its latest rate hike, according to Mortgage News Daily.

Rates hadn’t moved much in the days leading up to the Fed meeting earlier this week, but they had been slowly coming off their most recent high in mid-June, when the 30-year fixed briefly crossed 6%.

The drop Thursday also came on the heels of the Bureau of Economic Analysis’ gross domestic product report, which showed the U.S. economy contracted for the second straight quarter. That is a widely accepted signal of recession. GDP fell 0.9% at an annualized pace for the period, according to the advance estimate. Economists polled by Dow Jones had expected growth of 0.3%.

After the news, investors rushed to the relative safety of the bond market, causing yields to fall. Mortgage rates follow loosely the yield on the U.S. 10-year Treasury bond.

“This is an exceptionally fast drop!” wrote Matthew Graham, COO of Mortgage News Daily. “Perhaps even more interesting (and uncommon) is the fact that mortgage rates have dropped faster than U.S. Treasury yields. It’s typically the other way around as investors flock first to the most basic, risk-free bonds.”

Graham said the big picture shift in rates over the past month has created a situation where investors greatly prefer to be holding mortgage debt with lower rates. 

“In a way, mortgage investors are trying to get ahead of the game. If they’re holding mortgages at a higher rate, they will lose money if those loans refinance too quickly,” he added.

The question now is whether the market is in a new range, and rates will settle where they are now.

“If rates reverse course, volatility could be just as big going in the other direction,” Graham warned. He also noted that mortgage rates could move even lower if economic data continues to be gloomy and inflation moderates.

Already, lower rates appear to be having a slight impact on potential homebuyers. Real estate brokerage Redfin just reported seeing a slight uptick in searches and home tours in the past month, as rates came off their recent highs.

“The housing market seems to be settling into an equilibrium now that demand has leveled off,” Redfin chief economist Daryl Fairweather said in a release. “We may still be in for some surprises when it comes to inflation and rate hikes from the Fed, but for now an ease in mortgage rates has brought some relief to buyers who were reeling from last month’s rate spike.”

The increase in buyer interest, however, has not translated into new contracts, nor sales. The supply of homes for sale is increasing slowly, and there are reports of more sellers dropping their asking prices.