Mortgage Rates Sink to 1-Year Low—Should You Wait for the Fed or Lock In Now?

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Mortgage Rates Drop to Their Lowest Level in Over a Year

Rates on 30-year new-purchase mortgages have been drifting lower for several weeks. After falling during nine of the past 10 days, the flagship average is now down to 6.40%—its lowest level since early October 2024.

Six weeks ago, the 30-year average dipped to 6.44%. But rates then rebounded, climbing more than a quarter point to as high as 6.71% in late September.

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

A Fed Rate Cut Is Likely—But It Might Not Push Mortgage Rates Lower

The Federal Reserve is widely expected to announce a quarter-point rate cut next Wednesday—following a cut of that size in September. Many homebuyers assume that means mortgage rates will soon follow. But that’s not how it works.

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

Fixed-rate mortgages are shaped by broader forces: inflation trends, housing demand, and the overall economy. Most importantly, they tend to move with the bond market, especially the 10-year Treasury yield. On Tuesday, those yields sank to a 13-month low.

That’s 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. Yet 30-year mortgage rates surged almost 1.25 points between mid-September and mid-January.

How To Decide When to Lock In—and Why Waiting Could Backfire

With 30-year mortgages now at their cheapest level in more than a year, this could be a great opportunity for homebuyers who have been waiting to lock in. A lower rate means a lower monthly payment—and a welcome break after months of elevated borrowing costs.

But with the Fed widely expected to cut its benchmark rate next week, some buyers may be wondering if it’s smarter to wait and see whether mortgage rates fall even further.

The trouble is that mortgage rates are notoriously unpredictable. Even with a Fed cut, there’s no guarantee lender rates will improve. As recent swings have shown, they could instead jump higher after these lows.

That’s why it’s often better to buy when you’re financially ready and have found the right home, rather than trying to time the market. You can always refinance later if rates fall further—but you can’t rewind to grab a home that slipped away.

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.