The Federal Reserve announced another 25-basis-point cut to the federal funds rate on October 29, marking its second consecutive quarter-point reduction this fall. Though the Fed doesn’t directly control mortgage rates, these decisions influence borrowing costs across the economy. Anticipating the move, mortgage lenders had already begun lowering rates throughout October, with 30-year averages nearing 6%, the lowest level in more than three years. Despite this decline, housing demand remains muted, as mortgage applications have continued to fall. The Fed’s latest rate cut reflects its attempt to balance a slowing labor market and persistent inflation — choosing to support employment even if it risks prolonging price pressures.
However, lower mortgage rates haven’t translated into renewed buyer confidence. Economic uncertainty, lingering inflation and job security concerns have made many potential buyers cautious about making major financial decisions. Experts note that sentiment, not just interest rates, is now driving market behavior. While some homeowners may benefit from refinancing at these lower rates, buyers remain hesitant. The direction of mortgage rates for the rest of the year will depend largely on whether the Fed signals another rate cut at its December meeting, a decision that could determine how much relief the housing market actually sees going into 2026.
