Last week, mortgage rates dropped to their lowest point in the past year—great news for buyers excited about the potential monthly savings reflected in their cost estimates. While rates have edged up slightly since the Federal Reserve’s Wednesday 9/17 announcement of a .25% cut in the Fed Funds rate, we’re still seeing many 30-year fixed scenarios in the high 5% range. This is a strong motivator as we head into what’s shaping up to be a busy autumn market.
Looking ahead, the Fed continues to project further reductions to the Federal Funds Rate through the end of 2025 and into 2026. The rate, which banks charge each other for overnight lending, is expected to fall to between 3.5% and 3.75%—down from today’s 4.0%–4.25% range. While mortgage rates aren’t directly tied to the Fed Funds Rate, this forecast does create downward pressure on mortgage rates over time.
Inflation remains above the Fed’s 2% target, and with continued uncertainty around both inflation and employment trends, the Fed is proceeding cautiously. While further rate cuts are likely, they are not guaranteed—making now a strategic time to buy or sell.
Waiting for significantly lower mortgage rates could be risky. A sharp drop might spark increased competition, making it more difficult for buyers to get their offers accepted. It’s a good reminder to share with your buyers: refinancing later is always an option—but securing the right home now is key.
Rates at today’s levels haven’t been seen in over a year. With less competition and more inventory coming to market, activity is expected to rise.
As always, your Spruce representative is here to answer questions or help you explore specific scenarios. Don’t hesitate to reach out—we’re here to support you!
This material may not be copied, reproduced, or distributed without proper credit to the authors Buddy Singh NMLS 92046 and Julie Thorpe NMLS 92216/ Spruce Mortgage NMLS 49592
Ranjit “Buddy” Singh
Certified Mortgage Professional, NMLS 92046
Buddy@SpruceMortgage.com
(802) 652-0162
Julie Thorpe
Mortgage Loan Originator, NMLS# 92216
julie@sprucemortgage.com
Spruce Mortgage NMLS 49592
(802) 652-0162
SpruceMortgage.com