The Federal Reserve’s latest rate cut won’t immediately lower mortgage payments for homeowners — but it could set the stage for cheaper borrowing as mortgage rates fall to their lowest level in more than a year, according to Freddie Mac.
On Wednesday, the Fed lowered its benchmark federal funds rate by a quarter percentage point to a range of 3.75% to 4%, the second straight cut this year and the first time since 2022 the rate has fallen below 4%.
Policymakers cited concerns about a weakening job market and the ongoing government shutdown that has disrupted key economic reports.
Financial experts say the quarter-point cut is unlikely to move long-term mortgage rates immediately because the Fed’s policy rate and mortgage rates aren’t directly linked.
“There is not a one-to-one relationship between the Fed Funds Target Rate, which was cut by 0.25% today, and 30-year mortgage rates,” William T. Chittenden, president and CEO of the SW Graduate School of Banking at SMU Cox School of Business, told The Post.
The average 30-year fixed-rate mortgage has dropped to 6.19%, according to Freddie Mac’s Primary Mortgage Market Survey as of Oct. 23 — the lowest level in more than a year and nearly a full percentage point below where it stood at the start of 2025.
The 15-year fixed fell to 5.44%, according to the lender.
Freddie Mac said the 30-year rate averaged 6.28% over the past month and 6.7% over the past year, while the 15-year fixed averaged 5.51% — both marking the lowest levels since mid-2024.
“The initial reaction in bonds is muted, and mortgage rates are steady,” said Melissa Cohn, regional vice president at William Raveis Mortgage.
Still, she added, “mortgage rates could keep falling” if bond yields keep slipping.
The move came after weeks of public pressure from President Trump, who has repeatedly accused Fed Chair Jerome Powell of acting too slowly to ease policy.
Speaking in South Korea earlier Wednesday, Trump mocked him as “Too Late Powell” and urged deeper cuts to “unlock growth.”
September’s 3% inflation reading, slightly under forecasts, cleared the path for the rate cut.
But the White House warned that the continuing government shutdown could delay key economic reports — including October’s Consumer Price Index — that the Fed relies on to guide future decisions.
For now, mortgage lenders are watching how markets digest the Fed’s move.
If investors keep betting on more rate cuts, yields on 10-year Treasuries — the benchmark that most closely tracks mortgage pricing — could fall further, gradually easing borrowing costs, according to Freddie Mac economists.
Ted Jenkin, managing partner at Exit Wealth Advisors, said homeowners probably won’t feel an immediate impact from the Fed’s move, but expectations of further cuts could put downward pressure on 15- and 30-year mortgage rates.
The timing could be pivotal for real estate investors, said Yuval Golan, founder and CEO of the real-estate financing platform Waltz.
He called the rate cut “especially advantageous for real estate investors looking to refinance or buy new properties at a discount during the slow season for sellers.”
Golan added that “previously sidelined foreign real-estate investors, who are less affected by the seasonality of real-estate cycles, can take advantage of lower rates.”
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