Mortgage interest rates have been dropping recently and may continue to fall after this week's Fed meeting.
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All eyes will turn toward the Federal Reserve this week as the central bank holds its penultimate meeting of 2025 to determine monetary policy and the future of interest rates.
The bank issued a rate cut in its last meeting in September, its first of the year. That followed a pause for most of 2025 after the central bank cut rates three times in the final months of 2024. As of Monday morning, there was around a 97% chance the Fed would cut rates again in this week's meeting, according to the CME Group's FedWatch tool. While the expectation is that the federal funds rate will be reduced by 25 basis points, any relief here will help borrowers, even indirectly.
And that's especially true for homebuyers, some of whom have been contending with the highest mortgage rates on record in decades over the past few years. And while the Fed doesn't directly dictate what rates lenders offer borrowers, it does go a long way toward impacting them. But will mortgage interest rates actually drop after this week's Fed meeting? Or should borrowers expect them to hold steady a bit longer? Those are the questions we'll examine below.
Start by seeing how low your current mortgage interest rate offers are here.
Will mortgage interest rates drop after this week's Fed meeting?
The answer to this simple question is a bit more nuanced than it may seem on paper, and the timing may not align neatly enough to occur at the conclusion of the meeting on October 29. All one has to do is look at recent mortgage interest rate history to see that mortgage rates drop around the time of a Fed rate cut, but not always right after, and not necessarily by the same amount the Fed reduced rates by.
For example, mortgage interest rates fell to a two-year low in September 2024, a few hours before the Fed actually issued a larger-than-anticipated 50 basis point reduction at the time. And that same dynamic played out almost exactly one year later. When the central bank cut rates by 25 basis points last month, mortgage interest rates had already declined that morning to their lowest level in three years.
So, yes, mortgage interest rates could drop in connection with this week's Fed meeting, but that could occur preemptively, before the cut is issued. That's largely because lenders don't need the Fed to formally act to get ahead of that decision by reducing their offers. Many have already "priced in" this reduction, and that's why some borrowers may not see much of a material difference between the rates they see listed on online marketplaces today … and what they see on those same websites in the days following a cut.
Keep an eye out, then, for timely (and fleeting) opportunities to lock in a low mortgage interest rate this week. And remember that after the two aforementioned rate drops, there were increases in the rate climate both times. So, if you find a low, affordable rate available this week, even if not quite as ideal as you'd have hoped for, consider locking it in anyway. You never know when these opportunities will present themselves again, and you can always refinance if and when they do.
Compare mortgage rates and lenders online to learn more.
What's been happening with mortgage interest rates lately?
Overall, rates have been on a slow but noticeable decline for all of 2025. Mortgage rates were averaging just 6.13% in mid-September alongside the Fed's rate-cutting action at the time. They then rose later in the month as data items that would normally influence the rate trajectory were either delayed or paused amid the ongoing government shutdown. But in recent weeks, the average rate on a 30-year mortgage term has again declined. That was 6.34% on October 2, 6.30% on October 9, 6.27% on October 16 and 6.19% on October 23, according to FreddieMac.
So rates here are heading in the right, downward direction for borrowers. And they could fall again, not only this week but in the final weeks of the year, too, as projections surrounding another Fed rate cut when the bank meets for the last time in 2025 in December are also elevated.
The bottom line
Mortgage interest rates can potentially drop after this week's Fed meeting, or they could fall right before it, depending on the lender in question and their response to Fed rate activity. Some other lenders, however, may have already taken the step to adjust their offers to reflect a rate cut this week. Be ready to shop around for lenders and rates, however, as offers could be significantly different from lender to lender. And be prepared to lock in a below-average rate if found. As recent history illustrates, these opportunities may not last for very long.
Edited by Angelica Leicht
