On September 17, the Federal Reserve cut its benchmark interest rate by 0.25%, a move that financial markets had been expecting for some time. But it’s not just Wall Street that’s paying attention—so are millions of Americans hoping for relief from high mortgage rates.
If you’re thinking about buying a home or refinancing your current mortgage, here’s what this rate cut could mean for you.
✅ Mortgage Rates Are Already Dropping—Sort Of
The Fed doesn’t set mortgage rates directly. Instead, mortgage rates usually follow the lead of bond markets, which respond to economic trends—and often move before the Fed makes its official decisions.
That’s exactly what happened this time. In the weeks leading up to the Fed’s announcement, 30-year fixed mortgage rates fell to their lowest point in nearly a year. But once the Fed made its move, rates ticked up slightly again as markets absorbed the news.
So where are rates headed now? It’s unclear.
“There’s clearly no direction from Powell or from what the Fed has done today that says the rates are just going to march downwards,” says Melissa Cohn, regional VP at William Raveis Mortgage.
The bottom line: Rates are better than they’ve been—but not guaranteed to keep falling.
🏠 Homebuyers Might Have to Wait Until 2026
If you’re holding out for more affordable homeownership, you’re not alone. Many would-be buyers have been sidelined not just by high mortgage rates, but by a shaky job market and steep home prices.
“Affordability was improving a little in 2025,” says Orphe Divounguy, senior economist at Zillow, “but the frozen labor market kept a lot of buyers on the sidelines.”
As a result, many sellers found themselves slashing prices. In July, Zillow reported that over 27% of home listings had price cuts, the highest percentage since 2018.
But by August, even sellers started to retreat, with fewer new listings hitting the market. Why? Many homeowners sell because of job changes—and in a slower job market, those moves just aren’t happening.
Divounguy says 2026 could bring more stability. If the Fed continues to cut rates and the economy starts to regain momentum, both buyers and sellers could return to the market.
For now, though, inventory remains tight, and a meaningful rebound may still be a year away.
🔁 Refinance? Now Might Be the Time
While buyers might be stuck waiting, many homeowners have a window of opportunity to refinance—especially if you bought when mortgage rates were near 7% or higher.
“Rates were approaching 8% not too long ago,” says Danielle Hale, chief economist at Realtor.com. “Now that they’re under 6.5%, refinancing might make sense—even for people who bought earlier this year.”
As a rule of thumb, a refinance is often worth it if you can reduce your rate by at least 0.50%. But there are other factors to consider too:
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Lower Monthly Payments: A new 30-year mortgage spreads payments out, potentially lowering your monthly cost.
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Longer Loan Term: You’ll pay more in interest over time, but the tradeoff may be worth it for the cash flow.
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Refi Closing Costs: Expect to pay between 2% to 6% of your loan amount upfront.
Should you wait for rates to drop further? Experts say don’t hold your breath.
“We can’t get too greedy,” Cohn cautions. “Rates have already dropped a lot over the past month.”
Hale adds, “Even the best projections can’t predict where the world is headed next.”
💡 Bottom Line: Act When the Numbers Make Sense
Whether you’re buying or refinancing, chasing the perfect interest rate isn’t always realistic. If the math checks out—and you plan to stay in your home—it may be time to move forward.
If you’re looking for tools, calculators, or guidance on your refinance or homebuying journey, CreditVana is here to help you stay smart, confident, and in control of your financial future.
