In September 2025, the Federal Reserve announced an interest rate cut. And if you’re like many homebuyers, you may have thought: “Finally! Mortgage rates are going to drop immediately!” But while it might seem that way, it’s not that simple.

Here’s how the Fed’s actions sometimes affect mortgage rates.

Fed Rates vs. Mortgage Rates

Unfortunately, when the Fed lowers its benchmark rate, which affects how much it costs banks to borrow money, it doesn’t automatically mean mortgage rates will fall.

It’s easy to see why buyers think this and hope for the best. Rates directly affect monthly payments, and in a high-cost economy, everyone wants to lower expenses and seize any chance to save.

However, the Fed’s rates mostly impact short-term lending between banks, while mortgages are long-term loans influenced by a mix of factors such as the bond market, inflation expectations and the overall economy.

So what does this mean for you as a homebuyer?

While you might have delayed buying, thinking this type of announcement would save you money, the truth is that mortgage rates can move in unexpected ways like rising after a Fed cut or quickly dropping after financial news is released.

Why Rate Cuts Sometimes Push Mortgage Rates Up

It might sound counterintuitive, but a Fed rate cut can sometimes lead to higher mortgage rates. That’s because a rate cut can signal that the economy is slowing down, which can make investors rethink where they put their money.

This creates volatility in the bond market, which is closely tied to mortgage rates. In some cases, investors demand higher returns to compensate for the risk, which can push mortgage rates higher instead of lower.

So even when the news seems positive, this doesn’t always translate into savings for buyers.

What Can You Do?

Instead of fixating on unpredictable rates, focus on the things you can control that actually make a difference in your home purchase. This includes tightening your budget, saving for a larger down payment to lower monthly costs and thinking carefully about the type of loan that fits your financial situation.

You can also review your credit score and reduce debt, which can improve the mortgage options available to you.

Also talk with a mortgage professional who can run the numbers and explore your options – whether that’s a conventional loan, FHA or another program such as a lender credit or buydown that can help lower your costs.

Understanding your buying power and getting pre-approved means you’ll be ready to move when the right home comes along, without waiting for an uncertain rate drop.

The Bottom Line

The truth is, the perfect moment to buy rarely exists. Rates rise and fall, often in ways no one can predict. What really matters is being prepared. Work with a lender to determine your budget, and then focus on finding the right loan program that makes that budget possible.

If you’re thinking about buying, don’t wait around for the next announcement. Talk with a FirstBank Mortgage loan expert to see what makes sense for you today.