Should You Lock Now Or Wait For Possible Fed Cuts? – Forbes Advisor

Americans shopping for a mortgage may want to hold tight for now.

At its July 30 meeting, the Federal Reserve did not deliver a rate cut. The majority of members voted to leave the federal funds rate unchanged at 4.25% to 4.50%, signaling a continued wait‑and‑see stance.

As a result, mortgage rates will likely remain elevated for the near future. Lenders adjust interest rates based on the Fed’s federal funds rate and other economic conditions, meaning prospective homebuyers could face higher monthly payments if they lock in a mortgage right now.

However, the Fed may ease rates during its September meeting, potentially creating better opportunities for homebuyers to secure lower mortgage rates in late 2025.

What This Means for Mortgage Seekers

30-year fixed mortgage rates remain elevated, currently averaging 6.72% according to Freddie Mac.

Mortgage rates respond to several factors, including investor expectations about what the Fed might do next. If the Fed cuts rates later this year, mortgage rates could follow—but there’s no guarantee. If you shop for a mortgage today, you’re locking in a rate based on current conditions.

Acting now might make sense if you’re on a tight timeline. Some of the best mortgage lenders offer competitive terms, including rates lower than the national average and the ability to qualify for a mortgage with a minimum credit score of 580. However, if you want the lowest rate possible, you should work on improving your credit score to indicate less risk to a potential lender.

If you have the flexibility to wait, holding off until after the Fed’s September meeting might lead to better mortgage deals if the central bank cuts rates. However, no policy shift is certain at this time.

Read more: Mortgage Rates Forecast For 2025: Experts Predict How Much Rates Will Drop

How To Navigate Timing Strategically

1. Assess your timeline. If your home purchase is flexible, waiting may save you thousands in interest. If you’re on a deadline, don’t wait indefinitely—today’s rates are still reasonable by historical standards.
2. Monitor key economic data. The Fed’s September decision will factor in two more months of inflation data and labor market reports. Mortgage experts are keeping an eye on CPI data, wage growth, unemployment and hiring trends to anticipate whether a cut to the federal funds rate is imminent.
3. Ask about rate locks with a float-down option. Some lenders let you lock in today’s rate but still snag a lower one if rates drop before you close. It’s a valuable backup if you want to play it safe now, but anticipate the Fed might cut rates soon.
4. Factor in broader market conditions. Even if the Fed cuts rates, mortgage rates depend on Treasury yields, inflation expectations and global capital flows, not just Fed policy.

Bottom Line

For borrowers on the fence, waiting to pull the trigger on a mortgage—and possibly holding off through the summer—could be a smart move. The Fed’s July meeting offered no rate cuts, but growing internal dissent among the Fed’s board and a cooling labor market raise the odds of a cut in September. If you can afford to wait a few weeks, you might benefit from lower mortgage rates and save significantly across the life of your loan.

Conversely, if you’re under time constraints or risk missing out on desirable inventory, securing a rate now can still make sense, especially if your lender offers the option to adjust later.