IThe Move: What Happened on September 17
On September 17, 2025, the Federal Open Market Committee (FOMC) cut the federal funds rate by 25 basis points, bringing it down to 4.00%–4.25% — its first rate reduction since December 2024.
Federal Reserve Official Statement
Fed Chair Jerome Powell said the committee would continue to make data-driven decisions and stopped short of promising a steady series of cuts. One member, Stephen Miran, voted for a larger half-point cut.
Why Mortgage Rates Didn’t Drop Right Away
Before the Fed’s announcement, markets were already expecting a cut — so Treasury yields and mortgage rates dipped briefly as investors priced it in. Investopedia – Mortgage Rates After the Fed’s Move
However, when the Fed didn’t commit to further easing, investors adjusted their expectations. That caused 10-year Treasury yields and mortgage rates to rise again, reversing the earlier dip. Investopedia – Analysis
Where Mortgage Rates Stand Now
According to Freddie Mac, the 30-year fixed mortgage rate recently averaged around 6.30%, still lower than its 52-week high of 6.71%. Freddie Mac Primary Mortgage Market Survey
Even so, Bankrate notes that rates have risen for two straight weeks, showing that other market forces—like inflation data and Treasury yields—continue to influence borrowing costs. Bankrate – Current Mortgage Rates
What Really Drives Mortgage Rates
The Fed influences overall borrowing conditions, but it doesn’t directly set mortgage rates.
Mortgage rates are mostly determined by:
- 10-year Treasury yields
- Mortgage-backed securities (MBS) prices
- Inflation expectations and economic data
A borrower’s rate also depends on their credit score, down payment, debt ratio, property type, and loan program. Investopedia – How Mortgage Rates Are Set
Looking Ahead
Many economists expect the Fed to make additional small cuts later in 2025, depending on how inflation and job data evolve. CBS News – Fed Rate Cut Coverage
If that happens, or if investors believe it will, mortgage rates could gradually trend lower toward the end of 2025. But it’s not guaranteed — any surprise inflation or economic shifts could change the picture quickly.
“Investor confidence in a forthcoming rate-cutting cycle could help push borrowing costs lower in the back half of 2025, offering some relief to housing affordability.”
— Sam Williamson, Senior Economist, First American
Bottom Line
Mortgage rates likely won’t drop sharply overnight, and they won’t mirror the Fed’s moves one-for-one. But if the Fed begins a rate-cutting cycle, and markets continue to expect it, mortgage rates could trend lower later this year and into 2026.
Even small rate changes can impact affordability — so it’s smart to talk with your lender or Realtor® about strategies now, rather than waiting for the “perfect” timing.