The Fed Cut Rates: What That Really Means for Your Mortgage
On September 17, 2025, the Federal Reserve lowered its policy rate by 0.25%—its first cut since last winter. Headlines are everywhere, but here’s the part most people miss: fixed mortgage rates don’t move one-for-one with the Fed.
Why your 30-year rate didn’t just drop 0.25%
- Mortgages track the bond market, not the Fed funds rate. Thirty-year fixed rates tend to follow the 10-year U.S. Treasury and mortgage-backed-securities (MBS) yields. When investors expect cuts, those longer-term yields often fall before the announcement—so lenders may have already priced in part of today’s move.
- Spreads matter. The gap between mortgage rates and the 10-year Treasury isn’t fixed; it widens or narrows with risk, supply/demand for MBS, and liquidity. That’s why mortgage rates can drift even when the 10-year is flat.
Who feels it first?
- HELOCs and other variable loans. These are usually tied to the Prime Rate, which moves with the Fed funds rate—so HELOC payments are the first to budge after a cut.
- New fixed mortgages. If bond yields keep easing, lenders may follow with lower fixed rates—but the path is rarely a straight line and markets often move ahead of the news. (Going into today’s meeting, traders were broadly pricing in a 0.25% cut.)
What this could mean for you (quick takes)
- Buying soon? Watch the 10-year Treasury. If it trends lower, today’s pricing can improve. Ask your lender about a float-down option in case rates dip after you lock.
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Selling? Slight rate relief can bring sidelined buyers back—especially in entry and mid-price bands. Pair pricing discipline with strong presentation to capture early momentum.
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Have a HELOC? Expect your rate to adjust with Prime (often within a billing cycle). Consider principal prepayments while rates ease.
- Thinking about strategy? Temporary buydowns, assumable VA/FHA loans, and rate-cap ARMs can be powerful when paired with solid underwriting and a clear time horizon. We’ll model them side-by-side for you.
Want to see the math on your budget in seconds?
Small moves in rates can make a big difference in monthly payment—especially if you’re buying your first home or debating a move from a low fixed rate. Our Loan Rate Impact Calculator models your price, down payment, and rate, then shows how a ±0.25% to ±1.00% change could shift your payment so you can plan with confidence.
→ Try the Loan Rate Impact Calculator
As always, our goal is to keep you informed so you can make the best decisions for your future—whether that means buying, selling, or simply understanding where the market stands.
No pressure—just honest guidance. Let’s connect and we’ll run your exact numbers.
