Mortgage Rates Sink to an 11-Month Low—Will Fed Cuts Push Them Even Lower?

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Mortgage Rates Are at Their Lowest Since October

Rates on 30-year new purchase mortgages have been drifting lower for several weeks. But now a strong three-day slide has pushed the flagship average to its lowest level in 11 months.

On Friday, the national average fell 11 basis points to 6.48%—an 18-point drop across just three days. That marks the lowest level since Oct, 4, 2024, when the flagship average hit 6.43%.

The chart below shows how the 30-year mortgage average has moved over the past 11 months.

The Fed Is on Track for Multiple Rate Cuts This Year

After three rate cuts last fall and winter, the Federal Reserve has so far held its benchmark rate steady throughout 2025. That stance will almost certainly change soon, especially after Friday’s dismal jobs report.

On Thursday, markets were pricing in a near-certain quarter-point cut at the central bank’s September 17th meeting. The weak employment numbers, however, raised the odds: investors now see a 12% chance of a bigger half-point cut, and a majority expect reductions totaling at least 0.75 percentage points by year-end. Before the jobs report, investors saw only a 4% chance of a bigger half-point cut.

The Fed’s September decision won’t be known for nine days, and its October and December moves remain even less certain. Still, even if multiple cuts arrive, that won’t guarantee further improvement in mortgage rates.

Why Even Big Fed Cuts Don’t Mean Lower Mortgage Rates

It’s a common assumption: when the Fed cuts rates, mortgage rates fall. But that’s not how it works.

The federal funds rate mainly affects short-term borrowing costs—think credit cards, personal loans, and bank deposit rates—not long-term loans like mortgages.

Fixed-rate mortgages are driven by broader forces, including inflation, consumer demand, housing supply, and overall economic strength. Most importantly, they tend to track the bond market, especially 10-year Treasury yields. On Friday, those yields sank to a five-month low after the weak August jobs report.

This complex mix of factors is why mortgage rates often move independently of the Fed—and sometimes in the opposite direction. Case in point: in late 2024, the Fed cut rates by a full percentage point over three months. But instead of falling, 30-year mortgage rates surged nearly .75 points higher by mid-January.

What This Big Rate Drop Means for Buyers and Refinancers

Deciding when to buy a home or refinance a higher-rate mortgage is never simple. Should you take the plunge now, wait until later this year, or hold out for 2026 in hopes of cheaper borrowing?

The challenge is that mortgage rates are notoriously unpredictable. Industry forecasts currently see the 30-year average drifting only into the mid-6% range by year-end and perhaps the low-6% range by the end of 2026. But the weak employment numbers and the prospect of larger Fed cuts could prompt those predictions to change.

Still, there’s a strong case for simply buying when you’re financially ready and have found the right home. Waiting for the chance of lower rates could mean missing out on a great house. Or it could backfire if rates rise instead. Plus, even if you lock in a mortgage now, you’re not stuck with it forever. Should rates fall significantly in the future, refinancing remains an option for reducing your costs.

How We Track the Best Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of 20%) and an applicant credit score in the 680–739 range. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may vary from advertised teaser rates. © Zillow, Inc., 2025. Use is subject to the Zillow Terms of Use.