Mortgage Rates Are Falling — Is Now the Time To Buy?
Written by
T. Woods
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Jenna Klaverweiden
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As recently as January of 2025, the average interest rate on a 30-year fixed mortgage hit 7.04%, per the Federal Reserve Bank of St. Louis. Nine months later, mortgage rates have continually dropped, with an interest rate now resting at 6.35%. In fact, ABC News recently reported a one-week drop in September from 6.5% to 6.35%, which was the single biggest one-week drop in 2025.
With mortgage rates falling so precipitously, is now the time to buy a new home?
Why Are Mortgage Rates Falling?
While America’s current employment slowdown is unfortunate (with job reports over the summer showing a sharp decrease in hiring), the Federal Reserve just cut interest rates, which could alleviate the cost of borrowing.
According to Rocket Mortgage, each decreased percentage point in the mortgage rate can actually save a homebuyer thousands — or even tens of thousands — in costs per year.
Is Now the Time To Buy?
While some may be tempted to purchase a home now, with mortgage rates as low as they currently are, others may wish to hold out for even further drops. So which is the better path?
Fed Chair Jerome Powell has indicated that interest rates may indeed be cut even further later in 2025. Before you use that information as a reason to wait, keep the following in mind: Rate cuts don’t always lead to lower mortgage rates.
“Rates could come down further, as the Fed has signaled the potential for two more rate cuts this year,” Lisa Sturtevant, chief economist at Bright MLS, told ABC News. “However, there are still risks of a reversal in mortgage rates. Inflation heated up in August and if the September inflation report shows another bump in consumer prices, it’s possible we could see rates rise.”
Ultimately, for those considering buying a home in 2025, it remains to be seen what will happen with mortgage rates for the rest of the year. While the Fed has signaled upcoming rate cuts, that doesn’t necessarily mean mortgage rates will drop too.
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