The Federal Reserve cut the federal funds rate by 0.25 percentage points (¼ %) yesterday. This marks its third consecutive rate cut this year, bringing the target range down to about 3.5 %–3.75 %. Fed officials cited a slowing labor market, inflation that remains somewhat above target, and evolving risks to the economy. This shift reflects concerns that economic growth and employment may be weakening enough to justify easier policy. In their statement, the Fed emphasized that they will carefully assess incoming economic data (inflation reports, job figures, etc.) before deciding on future moves. They signaled a likelihood of only one more rate cut in 2026 — suggesting a slower pace of easing than markets might have hoped.
If long-term bond yields stay stable or fall (due to slower growth expectations), mortgage rates could drift a bit lower. But if inflation concerns or stronger economic data push yields up, mortgage rates might stay where they are or even rise despite short-term rate cuts.
Either way, most experts predict mortgage rates in 2026 will not be moving drastically lower. Bummer.
