Key Takeaways
- Mortgage rates have climbed after the Fed’s recent cut, reminding homebuyers that the two don’t always move in the same direction.
- Industry forecasts see 30-year mortgage rates holding in the mid-6% range through 2025, with dips to lower 6% territory by late 2026.
- Buyers may benefit more from finding the right home now and refinancing later rather than waiting for the “perfect” rate.
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Why Mortgage Rates Are Rising After the Fed’s Cut
Relying on Federal Reserve rate cuts to bring mortgage relief hasn’t worked out well for buyers lately. Last fall, the central bank lowered its benchmark rate three times, yet mortgage rates surged—rising more than a full percentage point by mid-January. Right now, another post-Fed climb is unfolding: After last week’s cut, the average 30-year mortgage rate is 25 basis points higher than it was before the Fed’s announcement.
The reason mortgage rates headed upward is that they don’t follow the federal funds rate directly. The fed funds rate primarily influences short-term borrowing costs for credit cards and personal loans, rather than long-term loans like mortgages.
A 30-year fixed-rate mortgage is instead steered by a complex mix of forces, including inflation expectations, housing demand, and other economic conditions. Most importantly, mortgage rates closely track the bond market, especially the 10-year Treasury yield. That’s why mortgage rates often move independently of the Fed’s moves—even sometimes in the opposite direction.
Because mortgage lenders had already priced in last week’s cut, it’s not surprising that it didn’t push mortgage rates lower. Lenders often adjust rates ahead of Fed decisions when markets are confident about what those moves will be—and last week’s cut had been overwhelmingly expected for weeks.
That’s why leaning on Fed moves is a risky timing strategy for homebuyers. A rate cut sometimes nudges mortgage rates lower, but it’s far from guaranteed, and recent history shows that mortgage rates can just as easily climb higher.
Mortgage Rate Forecasts for 2025 and 2026 from Industry Experts
Given that mortgage rates don’t necessarily track the Fed’s moves, homebuyers may find industry forecasts more useful than trying to guess the impact of each policy decision. Unfortunately, the latest 2025 projections haven’t changed much, with estimates clustered within a tenth of a percentage point of last month’s predictions. Meanwhile, the outlooks for 2026 were trimmed more noticeably than those for the rest of 2025, though the adjustments are relatively modest.
Five major industry groups project that mortgage rates will stay in the mid-6% range through the end of 2025, but could dip to a low 6% average by late 2026. Below we’ve compiled these latest outlooks from Fannie Mae, the Mortgage Bankers Association, the National Association of Realtors, the National Association of Home Builders, and Wells Fargo.
Is It Better to Buy Now or Wait for Lower Mortgage Rates?
The current 30-year mortgage rate average stands at 6.70%, up from 6.45% the day before the Fed’s cut. Despite the recent uptick, rates are still well below the 7%-plus levels buyers faced as recently as spring—and for many, being back in the mid-6% range probably feels like a psychological relief.
Most industry forecasts predict that rates will remain around 6% well into 2026. But Tom Hutchens, president of Angel Oak Mortgage Solutions in Atlanta, is more optimistic. “I expect mortgage rates to drift lower over the next couple of years, but not in a straight line,” he told Investopedia. “If inflation continues to ease, it’s realistic to see 30-year fixed rates in the mid-5% range by late 2026.”
Even so, Hutchens cautions against waiting too long in hopes of scoring the perfect rate. “As a buyer it’s best to focus first on what you can comfortably afford at today’s rate, not on trying to time the market,” he said. “If you find a home that fits your budget and long-term needs, it often makes sense to approach with a ‘buy now’ attitude.”
The bigger risk, he notes, is that lower rates could unleash a wave of demand—and higher home prices. “Paying today’s rate for a year or two and refinancing later could be far less costly than competing in a market where home prices rise $25,000 to $50,000 or more,” Hutchens said.
The good news is that locking in today’s rate doesn’t mean you’re stuck forever. If rates fall in the future, refinancing can provide a straightforward path to lowering your monthly payment.
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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 range of 680–739. 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.