A Reality Check for Homebuyers

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Mortgage Rates Have Jumped Since the Fed Meeting

Just before the Federal Reserve’s Sept. 17 rate cut, mortgage rates dipped to an almost 11-month low, but jumped immediately afterward. Within a week, they rose to 6.71%. They’ve dipped slightly in recent days to 6.65%, but that still leaves borrowers paying roughly 20 basis points more than before the Fed’s cut.

Why Mortgage Rates Don’t Fall Just Because the Fed Cuts Its Rate

It’s a common assumption: When the Federal Reserve cuts interest rates, mortgage rates should fall. But the link is not direct. The Fed’s benchmark rate mainly affects short-term borrowing costs—like credit cards, personal loans, and bank savings yields—not long-term loans such as mortgages.

Thirty-year fixed mortgage rates are shaped more by the bond market, especially the 10-year Treasury yield, along with factors like inflation expectations, housing demand, and the broader economy. That’s why mortgage rates often move independently of the Fed—and sometimes in the opposite direction.

A clear example came late last year: Between September and December, the Fed cut rates by a full percentage point, yet by January the average 30-year mortgage rate was 1.25 points higher than before the September cut. A similar dynamic may be unfolding now, as questions about the Fed’s next steps weigh heavily on the bond market.

The Forces Driving Mortgage Rates Higher Right Now

Because mortgage rates track the 10-year Treasury yield much more closely than the Fed’s short-term rate, the central bank’s Sept. 17 quarter-point cut had little direct effect on borrowing costs. Long-term yields like the 10-year Treasury have been rising as markets weigh signs of a cooling job market against stubborn inflation.

The Fed is waiting for more data before deciding how quickly—or even whether—to move again. This uncertainty is pushing investors to demand higher returns for holding long-term bonds, which keeps mortgage rates elevated. For homebuyers, the key question is how long this pressure will last—and whether relief is really on the horizon.

Where Experts See Mortgage Rates Heading Next

Most industry experts expect mortgage rates to stay in the mid-6% range through 2025, with a gradual slide toward the low-6s by late 2026. That outlook points to some eventual relief, but not a sharp drop in the near term.

As you can see below, industry forecasts suggest homebuyers shouldn’t bank on a quick plunge in rates. Instead, many people may be better off focusing on the right home for them now, with refinancing as an option if rates ease later.

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 at least 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.