U.S. Mortgage Rates in 2025: Why Borrowers Should Lock In Now
Experts warn borrowers to lock in rates now as mortgage prices remain tied to Treasury yields, not short-term Fed decisions.
Despite expectations that the Federal Reserve may cut interest rates during its upcoming meeting on September 16–17, economists caution that this move will not necessarily lead to lower mortgage rates.
Mortgage rates have eased slightly in recent weeks, supported by weaker labor market data, including jobless claims reaching their highest level in four years. However, analysts suggest that this decline is unlikely to last. Rates are expected to stabilize or even rise gradually after the Fed’s meeting, according to Danielle Hale, chief economist at a leading real estate research firm.
Many American households mistakenly believe that mortgage rates move directly in response to Fed decisions on short-term interest rates. In reality, mortgage costs—especially 30-year fixed loans—are closely linked to 10-year Treasury yields, which reflect investors’ concerns about the U.S. economy. Rising inflation, for example, often pushes Treasury yields higher, which in turn lifts mortgage rates.
Locking in Mortgage Rates Now May Be Wiser
Given this outlook, financial advisors recommend that borrowers act now to lock in rates before the market shifts upward. Michael Koko, a certified financial planner at Beacon Wealth Partners, notes that securing a rate today protects borrowers from future increases. If rates fall later, borrowers can often negotiate with a different lender for better terms. Some lenders even offer “float-down” options, which allow rates to adjust lower before closing without extra fees.
Borrowers appear to be acting on this advice: refinancing rate locks surged by 70% in August, marking the strongest month this year, according to data from Optimal Blue, a mortgage technology firm.
Still, projections suggest that 30-year mortgage rates are unlikely to drop below 6% until at least 2026, unless the labor market weakens dramatically and inflation falls sharply, according to Chen Zhao of Redfin. Experts advise comparing offers from both traditional banks and mortgage brokers, who may provide more flexible programs to secure the best possible terms.
In today’s environment, moving quickly to lock in a rate may prove to be the wiser strategy—rather than waiting for Fed decisions that may not directly affect mortgage costs.
