{"id":6829,"date":"2025-09-16T09:13:18","date_gmt":"2025-09-16T13:13:18","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=6829"},"modified":"2025-09-16T09:13:20","modified_gmt":"2025-09-16T13:13:20","slug":"federal-reserve-poised-to-start-rate-cuts-whats-next-for-mortgages","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/federal-reserve-poised-to-start-rate-cuts-whats-next-for-mortgages\/","title":{"rendered":"Federal Reserve Poised to Start Rate Cuts: What\u2019s Next for Mortgages?"},"content":{"rendered":"\n
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Mortgage rates are dipping down in advance of the Federal Reserve\u2019s discussion of rate cuts this week. Freddie Mac shows the average rate on 30-year, fixed-rate home loans<\/a> is just about 6.3% as of mid-September, down from 7% at the start of 2025.<\/p>\n\n\n\n

Two weak U.S. employment reports pushed the average rate down. In response, loan applications are now ticking upward, according to Freddie Mac.<\/p>\n\n\n\n

Meanwhile, the real estate world expects the U.S. Federal Reserve System (central bank) to cut its lending rates two or three times by the end of this year. That\u2019s encouraging hopeful buyers. Late 2025 might just be the right time, finally, for some sidelined buyers to make their moves.<\/p>\n\n\n\n

That said\u2026   <\/p>\n\n\n\n\n\n\n\n

Mortgage Borrowing and Home Buying Will Likely Rise\u2014Gently<\/h2>\n\n\n\n

Rate cuts are good news for people who want loans. More people may be able to buy homes.<\/p>\n\n\n\n

Still, there are limits to how many people are in the position to buy in this weakening economy. Clear signs of difficulties for earners are swelling costs for food and fuel, in the midst of rising unemployment and a depressed hiring rate.<\/p>\n\n\n\n

There\u2019s another damper on the market too. Four in five deed holders have mortgages with rates under 6%. So, those who already own their homes are generally feeling good about their monthly housing costs, and not pressed to sell and move.<\/p>\n\n\n\n

Granted, the supply of homes for sale<\/a> is more plentiful than last year. And pending home sales are up slightly from where they were last summer. (Sale prices are up, in part because new listings have slowed to a trickle after the surge we saw earlier this year.)<\/p>\n\n\n\n

All things considered, the mood surrounding rate cuts is hopeful \u2014 but the celebration is muted.<\/p>\n\n\n\n

Buyers Seem More Cautious Than Excited<\/h2>\n\n\n\n

Agents are seeing house hunters out and about. But potential buyers are not touring homes at the pace sellers might hope for. And they aren\u2019t necessarily anxious to bid. Many are haggling with sellers. Some are backing out of deals.<\/p>\n\n\n\n

So, some deed holders who might have sold are reading the room, staying out of the market for now, and waiting for buyer demand to rise. Redfin\u2019s Homebuyer Demand Index shows a fairly muted level of interest in home buying at the moment.<\/p>\n\n\n\n

Of course, there are people taking a new look at the real estate market. With the rates down this low, the median U.S. monthly payment has dipped by $200 since the spring and is now down to $2,600.<\/p>\n\n\n\n

Some prospective buyers want to know if waiting a little longer may pay off, as rates could inch down further over the coming months. This is one reason buyers are in no rush to sign purchase agreements.<\/p>\n\n\n\n

But Redfin does not expect rates to go too much lower from here. At least not mortgage rates. In fact, says Chen Zhao, who heads economics research at Redfin, \u201cmortgage rates could rise if the Fed fails to meet the market\u2019s expectations.\u201d Zhao is not the only analyst saying that mortgage rates could actually head back toward 7%<\/a> despite a series of bank rate cuts from the Federal Reserve.<\/p>\n\n\n\n

The Federal Rate Cuts Are Likely to Continue<\/h2>\n\n\n\n
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The Federal Reserve is the central bank of the United States. When it cuts its benchmark rate, that means it lowers the charges banks must pay to each other when they borrow overnight.<\/p>\n\n\n\n

That doesn\u2019t cut mortgage rates.<\/p>\n\n\n\n

But the cuts to bank lending rates often do correlate, in time, with the interest rates paid by individual borrowers.<\/p>\n\n\n\n

So, will the Federal Reserve keep cutting its overnight lending rates? Probably so. Most market watchers do expect more federal rate cuts later this year.<\/p>\n\n\n\n

There are other factors, though, that could make a big impact on the finances of individual borrowers:<\/p>\n\n\n\n