Mortgage rates are almost 10% lower than they were in May, but is it really time to secure them?

Mortgage rates have been falling since the spring

Although the slide has been bumpy, mortgage rates are much cheaper than they were about six months ago. The average 30-year fixed rate is now 6.50%, compared to 7.15% in mid-May, based on an Investopedia analysis of daily Zillow rate data. This represents a decline of more than 9% from the peak reached this spring in 2025, providing modest relief to buyers struggling to afford a new mortgage.

The Fed’s cuts haven’t lowered mortgage rates — here’s why

The Federal Reserve’s interest rate cut in late October made headlines, but unfortunately for homebuyers, it did not provide cheaper mortgages. In fact, the average 30-year fixed interest rate has risen from 6.35% on October 28, the day before the Fed’s move, to 6.50% now.

It’s a common assumption that when the Fed lowers its benchmark interest rate, mortgage rates will also fall. But the link is not direct and the interest rate set by the Fed mainly affects short-term borrowing costs, such as credit card and savings returns, not long-term loans such as 30-year mortgages.

Instead, mortgage interest rates take their cues from the bond market, especially the 10-year Treasury yield, which reflects investors’ expectations about future inflation, growth, and Fed policy. When investors expect the economy to remain strong — or worry that inflation may rise again — bond yields and mortgage interest rates often rise, even after the Fed cuts.

Modern history confirms this point. After the Federal Reserve cut interest rates in September, mortgage interest rates rose instead of falling. Late last year, the Fed cut interest rates by a full percentage point between September and December, but by January, the average interest rate on a 30-year mortgage was about 1.25 points higher than it was before those cuts.

“People associate Fed cuts with mortgage interest rates, but there is no direct correlation,” said Christopher Carter, vice president and director of sales at Univest Home Loans. “Over time, multiple cuts may accumulate and lead to lower interest rates in the long term, but in the short term they provide no guarantee.”

He added that even experienced observers cannot reliably predict where interest rates will go next. “Even the Fed’s Jerome Powell doesn’t know which way interest rates are going,” Carter said. “The government shutdown is exactly the ‘fog’ he referred to last week.”

Is it time to close or keep waiting?

For borrowers wondering whether to act now or wait for lower interest rates, the outlook is not exciting. Most major forecasts, including Fannie Mae’s, envision 30-year interest rates hovering in the average 6% range for the rest of this year and sliding toward the 6% mark by the end of 2026 — suggesting modest relief ahead. But the improvement is not expected to be significant or bring back the very low rates of a few years ago.

Carter said: “There are possibilities that interest rates will remain confined to a narrow range, without any significant decline or rise.” “If someone is in the market to buy, they should take advantage of our rates and not wait for better rates.”

Even if prices decline a little from here, the difference may not outweigh the risk of losing the right home. What matters most is that you’re financially prepared — with a strong credit score, steady income, manageable debt, and enough savings for a down payment — so you can move when the right opportunity comes along.

“Every consumer should examine their personal budget and determine whether the recent decline in interest rates will benefit them now, or whether they should roll the dice on potentially lower interest rates in 2026,” Carter said.

For many buyers, the smart approach is to buy when the timing is personally right and refinance later if rates fall. This approach balances patience with opportunity – recognizing that although markets may move unexpectedly, personal preparedness is something you can control.

How we track the best mortgage rates

The above national and local averages are provided as is through the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e. a down payment of at least 20%) and an applicant’s credit score in the range of 680-739. The resulting rates represent what borrowers should expect when receiving quotes from lenders based on their qualifications, which may differ from advertised teaser rates. © Zillow, Inc., 2025. Use subject to Zillow’s Terms of Use.