Mortgage rates are finally heading in the right direction – and buyers are starting to jump back in.

According to the data, buyer demand picked up considerably once mortgage rates hit a new low for 2025. The Mortgage Bankers Association (MBA) reports that applications for home loans were up 23% compared to the first week of September last year.

If you’ve been waiting to sell, or your listing recently expired because the market was slower than you hoped it would be, now’s the time to reconsider your move. Buyer demand is the highest it’s been since July – and you don’t want to miss this window.

When Rates Drop, Buyers React

Here’s what’s happening. The 30-year mortgage rate dropped to 6.13% earlier this week. And that’s the lowest it had been since October 2024. That decline followed weak job growth and other economic indicators that are fueling speculation the Federal Reserve may cut the Federal Funds Rate multiple times this year. Mortgage rates started dropping because financial markets are anticipating those Fed decisions. And that opens the door for more buyers to act.

Since today’s buyers are looking at every angle to make home purchases more affordable, they’re much more sensitive to even the slightest movement in mortgage rates. Basically, it boils down to this. As affordability improves, so does buyer demand (see graph below):

And that’s a change you’re going to feel – in a good way. Since about this time last year, we’ve been in a plateau of “limited” buyer demand. But now that rates are coming down, buyer demand is getting better.

What This Means for You

If you’re looking to move, it’s time to get serious about what’s happening in the market, and how you can use these key moments to your advantage. Maybe you have an expired listing that sat without offers earlier this year, or you held off on selling altogether, thinking buyers weren’t out there. This is your signal – they’re coming back. Now, it’s not in the big surge the market saw a few years ago, but this could be your window.

Here’s the opportunity. You can list, while buyer activity is rising and before more sellers in your neighborhood do too. Other homeowners may not see this shift for a while, so you can get a leg up on your competition if you act now.

On the flip side, if you wait, sure there may be more buyers if rates continue to inch down. But there are also going to be more sellers too. So, why take that risk?

A trusted local agent can help you assess your home’s value, fine-tune your pricing strategy, and make sure it stands out to the serious buyers who are taking action today.

Bottom Line

Buyers are watching rates, weighing their options, and starting to get off the sidelines. If you’re thinking about selling, this may be your chance to get ahead.

Want to make sure your house shows up for the right buyers, at the right time?

Connect with an agent to walk through the steps together so you can make the most of this moment.

The Federal Reserve (the Fed) meets this week, and expectations are high that they’ll cut the Federal Funds Rate. But does that mean mortgage rates will drop? Let’s clear up the confusion.

The Fed Doesn’t Directly Set Mortgage Rates

Right now, all eyes are on the Fed. Most economists expect they’ll cut the Federal Funds Rate at their mid-September meeting to try to head off a potential recession.

According to the CME FedWatch Tool, markets are already betting on it. There’s virtually a 100% chance of a September cut. And based on what we know now, there’s about a 92% chance it’ll be a small cut (25 basis points) and an 8% chance it will be a bigger cut (50 basis points):

So, what exactly is the Federal Funds Rate? It’s the short-term interest rate banks charge each other. It impacts borrowing costs across the economy, but it’s not the same thing as mortgage rates. Still, the Fed’s actions can shape the direction mortgage rates take next.

Why Markets Already Saw This Cut Coming

Here’s the part that may surprise you. Mortgage rates tend to respond to what the financial markets think the Fed will do, before the Fed officially acts. Basically, when markets anticipate a Fed cut, that outlook gets priced into mortgage rates ahead of time.

That’s exactly what happened after weaker-than-expected jobs reports on August 1 and September 5. Each time, mortgage rates ticked down as financial markets grew more confident a cut was coming soon. And even though inflation rose slightly in the latest CPI report, the Fed is still expected to make a cut.

So, if the Fed goes with a 25-basis point cut, as expected, that’s likely already baked in to current mortgage rates, and we may not see a dramatic drop.

But if they go bigger and drop their Federal Funds Rate by 50 basis points instead, mortgage rates could come down more than they already have.

So, Where Do Mortgage Rates Go from Here?

While the upcoming cut may not move the needle much, many experts expect the Fed could cut the Federal Funds Rate more than once before the end of the year. Of course, that’s if the economy continues to cool (see graph below):

As Sam Williamson, Senior Economist at First American, explains:

“For mortgage rates, investor confidence in a forthcoming rate-cutting cycle could help push borrowing costs lower in the back half of 2025, offering some relief to housing affordability and potentially helping to boost buyer demand and overall market activity.”

If multiple rate cuts happen, or even if markets just believe they will, mortgage rates could ease further in the months ahead. But here’s the catch – all of this depends on how the economy evolves. Surprise inflation data or unexpected shifts could quickly change the outlook.

Bottom Line

Mortgage rates likely won’t drop sharply overnight, and they won’t mirror the Fed’s moves one-for-one. But if the Fed begins a rate-cutting cycle, and markets continue to expect it, mortgage rates could trend lower later this year and into 2026.

If you’ve been waiting and watching the housing market, now’s the time to talk strategy. Even small changes in rates can make a meaningful difference in affordability, and understanding what’s ahead helps you make the best decision for your situation.

You’ve been waiting for what feels like forever for mortgage rates to finally budge. And last week, they did – in a big way.

On Friday, September 5^th, the average 30-year fixed mortgage rate fell to the lowest level since October 2024. It was the biggest one-day decline in over a year.

What Sparked the Drop?

According to Mortgage News Daily, this was a reaction to the August jobs report, which came out weaker-than-expected for a second month in a row. That sent signals across the financial markets, and then mortgage rates came down as a result.

Basically, we’re seeing signs the economy may be slowing down, and as certainty grows in the direction the economy is going, the markets are reacting to what is likely ahead. That historically brings mortgage rates down.

Why Buyers Should Pay Attention Now

But this isn’t just about one day of headlines or one report. It’s about what the drop means for you.

This recent change saves you money when you buy a home. The chart below shows you an example of what a monthly mortgage payment (principal and interest) would be at 7% (where mortgage rates were in May) versus where rates roughly are now:

Compared to just 4 months ago, your future monthly payment would be almost $200 less per month. That’s close to $2,400 a year in savings.

How Long Will It Last?

That really depends on where the economy and inflation go from here. Rates could drop lower, or they could inch up slightly. 

So, make sure you’re connected with a good agent and trusted lender. They’ll keep a close eye on inflation indicators, job market updates, and reactions to upcoming Fed policy to gauge where mortgage rates may go from here.

But for now, focus on this. While no one can say for sure where rates are headed, the fact that rates broke out of their months-long rut is a good thing. If you’ve been feeling stuck, this could make the start of a new chapter. As Diana Olick, Senior Real Estate and Climate Correspondent at CNBC, says:

“Rates are finally breaking out of the high 6% range, where they’ve been stuck for months.” 

And that’s gives you more reason to hope than you’ve had in quite some time.

Bottom Line

This is the shift you’ve been waiting for.

Mortgage rates just saw their biggest decline in over a year. And if rates stay near this level, it could make a home you couldn’t afford just a few months ago feel possible again.

What would today’s rates save you on your future monthly payment? Connect with an agent or lender so you can find out.