Video
August 15, 2025
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August 15, 2025
Homebuyers: The Fed’s Rate Cut May Not Lower Your Mortgage Rate
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Many homebuyers believe that when the Fed cuts interest rates, mortgage rates will automatically follow. It is not that simple.
This week, mortgage rates held steady just above 6.5% on a 30-year fixed conventional loan according to Mortgage News Daily. That is positive news in this market. For most buyers, the challenge is not the home price but the monthly payment. Since the payment is directly tied to the interest rate, even small changes in rates can make a big difference in affordability.
The Fed is expected to cut rates on September 17, with odds over 90% for a 0.25% cut. But the Fed funds rate is not the same as mortgage rates. The Fed funds rate is the short-term rate banks charge each other to borrow money overnight. Mortgage rates are determined by market activity in mortgage-backed securities. Wall Street moves based on expectations, not just the actual announcement.
Right now, the market may have already priced in the 0.25% cut. That is why mortgage rates have dropped about 0.2% in the last month and more than 0.5% over the past three months. If the Fed delivers exactly what is expected, rates might not change at all. If they cut more than expected, rates could fall further. But if they hold steady, rates could rise quickly.
For buyers, the key takeaway is that waiting for the Fed may not deliver the rate drop they are hoping for. Rates today are already reflecting the expected decision, and sellers are still offering concessions. If the payment fits your budget and the home is right, this could be the time to move forward. If rates drop later, you can refinance. But if prices rise or rates go higher, that opportunity is gone.
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The information contained is the viewpoint of the presenter(s). Individuals should consult their own financial representative.
Estimated Mortgage Payment is for exemplary purposes only. Contact a licensed loan officer for exact numbers and APR. Additional rates and terms may apply and are subject to change without notice. Loan scenario assumes a purchase price of Zillow's list price and a 10% down payment. Points and fees not included. Property tax, homeowners insurance, mortgage insurance, and HOA fees are approximate and may vary. Other fees may apply. Product displayed is a conventional 30-year fixed rate mortgage using the current average rate as shown on Mortgage News Daily (mortgagenewsdaily.com).
Estimated Qualifying Income assumes a homebuyer has a FICO score above 740, no other credit debt, and a debt-to-income (DTI) ratio of 43%.
For exact numbers and APR or to run a loan scenario based on your own credit and income, contact our office at (858) 259-8700.
Rate Source: Mortgage News Daily. Rates displayed are approximate, subject to change, and do not necessarily reflect rates available to you. MND’s methods involve an objective component based on lenders' raw prices as well as a subjective impression from their network of originators. For more information about how these rates are calculated, visit www.mortgagenewsdaily.com/mortgage-rates/about.
Mortgage News Daily (MND) is a trademark of Brown House Media, Inc. Zillow is a trademark of Zillow, Inc. CrossCountry Mortgage has not been authorized, sponsored, or otherwise approved by Brown House Media, Inc. or Zillow, Inc.
Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call (858) 259-8700 for details. All borrowers must meet minimum credit score, loan-to-value, debt-to-income, and other requirements to qualify for any mortgage program. CrossCountry Mortgage, LLC is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the federal government. CrossCountry Mortgage, LLC is not affiliated with or acting on behalf of or at the direction of the Veteran Affairs Office or any government agency. Certificate of Eligibility required for VA loans. By refinancing, the existing loan total finance charges may be higher over the life of the loan.
