Despite Fed Cut, Mortgage Rates Hold Steady

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Current mortgage rates

The 30-year fixed mortgages in this week’s survey had an average total of 0.31 discount and origination points. Discount points are a way to lower your mortgage rate, while origination points are fees lenders charge to create, review and process your loan.

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Monthly mortgage payment at today’s rates

The national median family income for 2025 is $104,200, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in August 2025 was $422,600, according to the National Association of Realtors. Based on a 20 percent down payment and a 6.39 percent mortgage rate, the monthly payment of $2,113 amounts to 24 percent of the typical family’s monthly income.

“While lower rates will bring some buyers and sellers into the market, [last month’s] cut will not be enough to break up the housing market logjam,” says Lisa Sturtevant, chief economist at Bright MLS, a listing service in the Mid-Atlantic region. “We will need to see further drops in mortgage rates and much slower home price growth, or even home price declines, to make a dent in affordability.”  

What will happen to mortgage rates in 2025?

Amid expectations that the Federal Reserve would cut interest rates last month, mortgage rates fell to their lowest level in nearly a year, dropping to 6.30 percent in mid-September, according to Bankrate’s national survey of lenders. That was the lowest level since early October of last year.

However, once the rate cut became official, mortgage rates rose. A similar scenario played out last year: Even as the Fed cut rates by a point over several meetings in late 2024, mortgage rates moved in the opposite direction, rising nearly a point.

While the Fed decided to leave the federal funds rate untouched for most of 2025, Fed Chairman Jerome Powell finally acted at the central bank’s Sept. 17 meeting. A tepid jobs report seemed to seal the deal. Even so, fixed mortgage rates are not set directly by the Fed but by investor appetite, particularly for 10-year Treasury bonds. When there’s uncertainty in the market, investors buy Treasury bonds, which in turn drives yields — and, often, mortgage rates — downward.

Meanwhile, the U.S. economy seems to be back on track: The gross domestic product grew by an impressive 3 percent in the second quarter, the U.S. Bureau of Economic Analysis said last month. However, President Donald Trump’s tariff policies have been blamed for an increase in inflation, which moved up to 2.9 percent in August, making little progress toward the Fed’s inflation target of 2 percent. While 10-year Treasury yields moved briefly below 4 percent last week, they were above 4.1 percent as of Wednesday afternoon.

All eyes are on the September jobs report, which is scheduled to be released Friday (if the government shutdown is resolved). Jeffrey Ruben, president of WSFS Home Lending at WSFS Bank, thinks mortgage rates are likely to stay in a narrow range in the coming months. And while the Fed doesn’t directly control interest rates, he sees the Fed holding firm on its benchmark policy rate.

“Inflation has really not gotten to where the Fed wants it, which argues for either doing nothing or for potentially raising rates,” Ruben says. “They have taken cover in the jobs market.”

• Methodology
  

  The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.