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After months of anticipation, the Federal Reserve trimmed its benchmark interest rate today — dropping the benchmark rate by another 25 basis points and marking its second rate cut of 2025. The move, which follows a similar quarter-point reduction in September, underscores the Fed’s growing confidence that the economy can withstand a gradual return to lower borrowing costs.
For those who have been holding out hope that these Fed rate cuts would substantially lower mortgage rates, the question remains: Have the recent rate cuts actually helped homebuyers? After all, the link between the Fed’s rate cuts and mortgage rates isn’t as direct as many assume. While Fed cuts can influence borrowing costs, mortgage rates are largely driven by broader market forces that don’t always move in sync with the Fed’s policy moves.
In fact, over the past year, the relationship between the Fed’s actions and the direction of mortgage rates has been anything but predictable. And while today’s cut could provide some breathing room in the months ahead, past moves suggest that borrowers may need to temper expectations for just how far and how fast mortgage rates might actually fall.
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What happens to mortgage rates now that the Fed cut rates? Here’s what’s happened recently
Looking back over the past year gives us a clearer picture of how mortgage rates have actually reacted to each Fed cut. Here’s what’s happened since the central bank began easing policy in late 2024:
September 2024: The Fed’s first cut marked a turning point—but mortgage rates barely budged
After a long string of rate hikes that had pushed borrowing costs to multi-decade highs, the Federal Reserve finally cut its benchmark rate by 50 basis points on September 18, 2024, bringing it down to a target range of 4.75% to 5.00%. Leading up to that announcement, the 30-year fixed mortgage rate fell to around 6.08%, according to Freddie Mac, its lowest point in roughly two years.
However, the relief that cut offered was short-lived. Within weeks, mortgage rates began to rise again as markets reassessed the inflation outlook and Treasury yields ticked back up. In other words, the initial optimism that the Fed’s first cut would immediately translate to cheaper mortgage loans faded quickly.
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November 2024: A second cut didn’t move the needle much
In early November 2024, the Fed delivered another rate cut as part of its gradual easing cycle. Mortgage rates, meanwhile, hovered near a range of 6.8% to 6.9%, meaning that they’d actually increased slightly from the previous month.
The reason? Lenders were still pricing in uncertainty about future inflation and the possibility that the Fed might pause its cuts if price pressures returned. This reinforced a key pattern where mortgage rates tend to adjust in anticipation of future Fed actions rather than reacting directly after them.
December 2024: A small year-end cut, but stubbornly high mortgage rates
The Fed trimmed rates again in December 2024, this time by 25 basis points, which dropped the benchmark rate to a range of 4.25% to 4.50%. Yet again, though, mortgage rates barely moved, staying close to 6.8% through the end of the year.
At this point, the housing market had adjusted to the idea that the Fed’s cuts would be gradual, not aggressive. With inflation still above target and Treasury yields remaining elevated, mortgage rates stayed stubbornly high, even as short-term borrowing costs dropped.
September 2025: Another 25-basis-point cut finally nudged rates lower
Fast forward to September 2025, when the Fed cut rates again, this time by 25 basis points, lowering its benchmark range to 4.00% to 4.25%. Mortgage rates responded positively, with the average 30-year fixed dipping to a three-year low of about 6.13%, down from the mid-6.4% range earlier that month.
This time, though, the improvement felt more tangible. Markets had begun pricing in further Fed cuts, and inflation data had somewhat stabilized, creating conditions for a more sustained, if modest, decline in borrowing costs. Still, while the move offered some relief for refinance seekers, it fell short of the sub-5% mortgage rates many buyers hoped would return.
What could happen now that rates have been cut again?
With the Fed cutting rates for the second time this year, a lot of mortgage shoppers are hoping relief is finally on the way. The reality, though, is that the impact may take time.
If investors view this latest move as the start of a longer easing cycle, long-term Treasury yields could fall, paving the way for slightly lower mortgage rates in the days and weeks ahead. But if markets worry that the Fed is easing too quickly and inflation flares up again, those yields could climb instead, pushing mortgage rates higher.
Still, the timing looks more favorable now. Inflation has cooled compared to recent highs, though it did tick back up again according to the latest report, and with the Fed signaling more rate cuts ahead, mortgage rates could gradually drift toward the low-6% range, which is modest progress, but welcome news for borrowers.
The bottom line
If you’re waiting for a Fed cut to slash your mortgage rate, history shows that patience is key and expectations should be realistic. While borrowing costs have eased slightly, the Fed’s actions alone aren’t enough to drive a major drop. Still, there’s good news for borrowers. The steady trend toward easing suggests mortgage rates could gradually decline into 2026.
That means refinancing or buying could become a bit more affordable, even if the days of 3% mortgages are gone for now. Given the unknowns, though, the smartest move is typically to focus on readiness rather than timing. Have your credit, income documentation and down payment in order. Then, if mortgage rates do dip further in the coming months, you’ll be ready to lock in a deal before they bounce back again.