2 Reasons Not to Wait for a Fed Rate Cut Before Locking Your Mortgage Rate

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For House Hunters, Rate Timing Is Difficult

With today’s mortgage rates hovering in upper-6% to lower-7% territory, it can be tempting to hold out, delaying your purchase of a home until rates come down. And there is some wisdom in striving for the lowest mortgage rate you can secure, since a quarter- or a half-point rate difference can add up to hundreds or even thousands of dollars saved every year.

But if you’re thinking you’ll score a better mortgage rate if you can just wait until the Federal Reserve starts cutting rates later this year, you could be sabotaging your home-buying process. That’s because a lower Fed rate is not a sure thing this year. In addition, Fed rate cuts don’t necessarily mean mortgage rates will fall. Here’s why you’re likely better off buying when the time is right for your situation, rather than pegging your timing to the Fed.

A Fed Rate Cut Is Expected—But Not Until Fall, and Not Guaranteed

After lowering interest rates three times between September and December last year, the Federal Reserve moved into neutral with a rate hold in January, followed by further pauses in March and May. Though another Fed rate-setting meeting is upon us in two weeks, the overwhelming expectation is that the central bank will hold its benchmark rate steady yet again.

In addition, the CME Group’s FedWatch Tool shows markets currently place a 70% probability on the Fed’s July meeting also resulting in a rate hold. In fact, it’s predicted we won’t see a first 2025 rate cut until the meeting after that, which concludes with an announcement on Sept. 18.

But that September meeting is more than three months away, and a lot can happen in the economy during that time. In particular, the central bankers are watching closely for impacts of President Donald Trump’s ever-evolving tariff policy. For instance, we could see inflation tick back up. Or negative impacts could rear their head in the job market. These are competing problems and could make the Fed’s rate decisions difficult.

All this is to say that while the current expectation is that the Fed will begin lowering rates in September, anything can happen. Given the potential fallout from tariffs and possible trade wars, the Fed has been acknowledging how extremely uncertain things are right now. It’s therefore not inconceivable that the central bank could find itself holding rates at this high level for many more months than currently expected.

That’s one reason why waiting for a Fed rate cut may not be your best bet if you’re ready to move on a mortgage now. But there’s another reason.

Why a Fed Rate Cut Doesn’t Necessarily Spell Lower Mortgage Rates

It’s a common belief that when the Federal Reserve raises or lowers the federal funds rate, mortgage rates will move in sync. But in reality, the relationship between the Fed’s benchmark rate and what mortgage lenders offer is not so direct. Instead, moves by the central bank more directly impact short-term rates, such as those paid on bank accounts as well as those charged on credit card and personal loan balances.

Fixed mortgages are instead a long-term rate, and their connection to Fed rate changes is more tenuous. A tangle of economic factors affect the mortgage lending market, including inflation, consumer demand, housing supply, the strength of the current economy, and the status of the bond market, especially that of 10-year Treasury yields. Given these other influences, mortgage rates and the Fed funds rate can move independently—even in opposite directions.

That’s exactly what we saw in the last quarter of 2024, when mortgage rates shot up despite a bold half-point rate cut in September. Not only that, but after two more Fed reductions, 30-year mortgage rates surged again in late December and January, reaching almost 1.25 percentage points higher than before the Fed’s September rate cut.

Fallout from President Trump’s tariff policy, initiated on April 2, has also pushed mortgage rates around. Initially, the stock market dropped, sending bond yields lower. This caused a quick mortgage rate decline. But the massive uncertainty surrounding tariffs, and the trade wars they’ve ignited, later sent bond yields much higher, causing mortgage rates to surge.

Since then, the average 30-year mortgage rate has again fallen, continuing a roller coaster ride fueled by market uncertainties waiting to be resolved. Yet all of this mortgage rate movement has occurred while the federal funds rate has not moved an inch.

That means for mortgage shoppers, there’s no guaranteed payoff from a Fed rate cut, whenever it finally arrives. And no one can reliably predict where mortgage rates are headed the rest of this year—they could move even higher. So instead of looking to the Fed, it’s likely best to lock in a mortgage rate when the timing makes sense for 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.