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Trying to Time Mortgage Rates Is a Gamble for Homebuyers

Deciding when to buy a home is tough in any market—and with today’s mortgage rates in the upper-6% range, it’s tempting to delay in hopes of lower rates ahead. It’s certainly smart to aim for the lowest mortgage rate you can get, since even a quarter- or half-point difference can add up to hundreds, or even thousands, in annual savings.

But if you’re hoping to score a better rate simply by waiting for the Federal Reserve to start cutting interest rates later this year, you could be sabotaging your homebuying process. For one thing, a lower Fed rate isn’t guaranteed in 2025. And even if it happens, Fed rate cuts don’t always lead to lower mortgage rates. Here’s why you may be better off buying when the time is right for you, rather than pegging your timing to the Fed.

A Fed Rate Cut Could Come This Fall — But It’s Far From Certain

After lowering interest rates three times between September and December of last year, the Federal Reserve shifted into neutral—holding the federal funds rate steady in January, March, May, and most recently, last week. Looking ahead, it also appears likely the central bank will maintain rates at the current level at its next meeting, scheduled for July 29–30.

But markets are betting that a cut could come soon after. According to the CME Group’s FedWatch Tool, there’s now an 89% chance the Fed will lower rates at its Sept. 16–17 meeting—the first time in 2025 that expectations for a cut have moved into majority territory.

But that September meeting is still nearly three months away—and a lot can happen in the economy between now and then. In particular, the Fed is watching closely for the economic impact of President Donald Trump’s evolving tariff policy. Inflation could tick back up, or weakness could begin to show in the job market. These competing risks could complicate the Fed’s decision-making.

All of this is to say: While markets currently expect the Fed to begin cutting rates in September, nothing is guaranteed. With so much potential fallout from tariffs and global trade tensions, the central bankers have acknowledged how uncertain the outlook is right now. That means it’s not out of the question for policymakers to keep rates elevated well beyond what the market currently anticipates.

That’s one reason waiting for a Fed rate cut may not be your best move if you’re otherwise ready to take on a mortgage. But there’s an even more compelling one.

Even a Fed Rate Cut Won’t Guarantee Lower Mortgage Rates

Many homebuyers assume that when the Fed adjusts interest rates, mortgage rates will follow—but that’s not how it works. In reality, the relationship between the Fed’s benchmark rate and what mortgage lenders offer isn’t at all direct. Instead, the federal funds rate more directly influences short-term rates—like those paid on bank accounts and charged on credit cards or personal loans.

Fixed-rate mortgages, on the other hand, are long-term loans, and their connection to Fed policy is far more tenuous. A tangle of economic forces shapes the mortgage market—including inflation, consumer demand, housing supply, the overall strength of the economy, and especially movements in the bond market, like 10-year Treasury yields. Because of these other drivers, mortgage rates and the fed funds rate can move independently—and even in opposite directions.

That’s exactly what happened in the final quarter of 2024, when mortgage rates climbed sharply despite a bold half-point Fed rate cut in September, followed by two quarter-point reductions in November and December. While the federal funds rate dropped a full percentage point over those three months, 30-year mortgage rates surged nearly 1.25 percentage points higher by mid-January.

Mortgage rates have also been pushed around by President Trump’s tariff policy, which took effect on April 2. The initial market reaction sent bond yields tumbling and triggered a brief drop in mortgage rates. But as uncertainty deepened and trade tensions escalated, bond yields reversed course—and mortgage rates surged.

Since then, the average 30-year mortgage rate has fallen, risen, and fallen again—continuing a roller-coaster ride fueled by market volatility. Yet all of this has happened while the federal funds rate hasn’t moved an inch.

Now Could Be a Good Time to Lock In, as Mortgage Rates Just Hit a Springtime Low

This week, average rates on new purchase mortgages dropped to their lowest level since early April. The current 30-year national average of 6.84% is a welcome break after hitting a 1-year high of 7.15% last month. And with no Fed action likely coming before September, today’s lower rates may present an opportunity for borrowers who are otherwise ready to move.

What’s more, there’s no guaranteed payoff from waiting for a Fed rate cut—whenever it finally comes. And with no way to predict where mortgage rates will go in the meantime, buyers could just as easily miss out. Rates may fall further, or they could spike again. That’s why, rather than trying to outguess the market, it often makes more sense to lock in a mortgage when the timing fits your finances—and the right home comes along.

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.