Fed Cuts Rates, Mortgage Rates Slip to Near 6.1%

Lead The Federal Reserve trimmed its benchmark overnight rate by 25 basis points to a 4.00%-4.25% range Wednesday, spurring a drop in 30-year mortgage rates to about 6.13%.

Nut Graf The Fed’s first cut in nine months responds to signs of a cooling labor market and slowing growth, while homebuyers and refinancers are seizing lower borrowing costs amid expectations of further easing.

Fed’s First Cut Since December

The Fed lowered its target federal funds rate by a quarter-point at the close of its two-day meeting, citing weaker job gains and moderating economic activity. Policymakers also released updated projections showing room for additional cuts before year-end. Some board members dissented, arguing that inflation remains above target and the move may be premature.

Political Pressure and Independence

The decision comes amid intense political pressure. President Trump has publicly urged steeper cuts and pushed to reshape the Fed’s leadership, prompting questions about the central bank’s autonomy. Despite this, Fed Chair Powell affirmed that policy decisions remain data-driven and independent of external influences.

Mortgage Market Reaction

Home loan rates fell in tandem with Treasury yields as investors priced in greater odds of three quarter-point cuts in 2025. According to Zillow, national averages for purchase mortgages are now:

• 30-year fixed: 6.13% (down 3 bps)
• 15-year fixed: 5.41% (down 5 bps)

What Lies Ahead

Markets fully expect at least two more quarter-point reductions by December. Economists warn that while consumers and businesses will benefit from lower borrowing costs, savers and money-market investors will face persistently low returns. Lower mortgage rates could spur housing demand, but affordability remains strained compared to historic norms. Analysts recommend locking rates promptly, as further declines are likely but not guaranteed.