When will mortgage rates go down? The federal funds rate has decreased, but mortgage rates have increased.

Core Insights - Mortgage rates have increased recently, with the average 30-year fixed-rate mortgage at 6.22%, but they are lower than last year’s average of 6.60% [2][3] - The Federal Reserve has cut the federal funds rate three times in 2025, which typically influences mortgage rates, but the relationship is not direct [4][5] - Predictions indicate that mortgage rates may remain stagnant or increase in late 2025, with expectations of only one rate cut in 2026 [8] Mortgage Rate Trends - The average 30-year fixed-rate mortgage increased by three basis points to 6.22%, while the 15-year fixed mortgage rate rose by 10 basis points to 5.54% [2] - Over the past year, the 30-year rate is down by 38 basis points, and the 15-year rate is down by 30 basis points [2] - Historical data shows that mortgage rates are currently above their annual lows, indicating a potential for further fluctuations [3] Federal Reserve Influence - The Federal Reserve's actions, including three rate cuts in 2025, typically lead to changes in mortgage rates, although the correlation is not always immediate [5][6] - Despite the Fed's rate cuts, mortgage rates have shown a tendency to bounce back up after initial declines [7] Housing Market Dynamics - The current housing market is characterized by high demand and limited supply, leading to sustained high home prices [14] - The median sale price of single-family homes has increased from $208,400 in Q1 2009 to $410,800 by Q2 2025 [15] - Buyers may not see significant relief in home prices even if interest rates drop, as lower rates could increase demand further [16] Buyer Strategies - Prospective buyers are encouraged to consider various strategies, such as purchasing smaller homes or condos, to navigate the current market [18][24] - Exploring options like fixer-uppers or longer commutes to more affordable areas can also be beneficial [21][23] - Buyers should be aware of financial tools like rate buydowns to make current mortgage rates more manageable [26] Future Rate Predictions - The Mortgage Bankers Association predicts the 30-year fixed rate will remain around 6.4% through 2026, while Fannie Mae forecasts a drop to 5.9% by the end of 2026 [27] - Historical context shows that while current rates may seem high compared to recent lows, they are not unprecedented when viewed over a longer timeline [28]