The Federal Reserve recently cut interest rates by 0.25%, marking the third rate cut this year. The goal is to help slow a cooling economy. The decision was not unanimous. Some Fed members did not want to cut rates at all, which is likely why the reduction was limited to a quarter point. President Trump publicly stated the cut should have been at least twice as large.
That brings up the question many buyers and homeowners are asking.
Will This Rate Cut Lower Mortgage Rates?
The short answer is probably not, at least not in the way people expect.
There are two main reasons.
First, mortgage interest rates do not move directly with the Federal Reserve rate. Mortgage rates are more closely tied to long-term bond markets, especially the 10-year Treasury.
Second, this cut was widely expected. There was more than an 85% chance it would happen, which means lenders already adjusted pricing ahead of time. When something is expected, it is already baked into mortgage rates.
What we have consistently seen over the past year is that mortgage rates often rise after Fed rate cuts, not fall. The positive takeaway is that this year’s increases have been modest compared to the sharp spikes we saw toward the end of last year.
Below is a simple look at how mortgage rates reacted after the recent Fed cuts.
Fed Rate Cuts vs Mortgage Rate Movement (Since September 2024)
September 18, 2024
Fed cut 0.50%
Mortgage rates moved from 6.09% to 6.79%
Mortgage rates reached a low of 6.09% on September 8 and stayed flat until early October. Shortly after the cut, rates climbed quickly and peaked at 6.79%.
November 7, 2024
Fed cut 0.25%
Mortgage rates moved from 6.79% to 6.84%
Rates were already trending upward and increased slightly again before easing through mid-December.
December 18, 2024
Fed cut 0.25%
Mortgage rates moved from 6.72% to 7.04%
Rates hovered near 7% into early 2025 and peaked around January 16. In Wayne, this lined up with the lowest inventory month of the year, pushing median sale prices well above $800,000 in January 2025.
September 17, 2025
Fed cut 0.25%
Mortgage rates moved from 6.26% to 6.34%
Rates had been falling until the day after the cut, then reversed slightly before declining again.
October 29, 2025
Fed cut 0.25%
Mortgage rates moved from 6.17% to 6.26%
Mortgage rates increased modestly over the following three weeks.
December 10, 2025
Fed cut 0.25%
Mortgage rates moved from 6.2% to 6.3%
Rates inched higher even though they had dipped to 6.19% just days earlier.
What This Means for Buyers and Sellers in Northern New Jersey
Mortgage rates are trending in the right direction overall, but the bigger issue remains low inventory. There are still not enough homes for sale, and prices remain out of reach for many buyers.
Personally, I would rather see more homes come on the market than lower interest rates. Increased inventory would put downward pressure on prices faster than small rate cuts ever could.
The challenge is that many homeowners are locked into sub 4% mortgage rates and plan to stay put as long as possible. Because of that, inventory remains tight.
Looking ahead, inflation and long-term bond yields will play a much larger role in where mortgage rates go next than Federal Reserve cuts alone.
Related Local Market Insights
If you want a deeper look at how these trends play out locally, you may also find these helpful:
Wayne, NJ Housing Market Update
A closer look at pricing, inventory, and buyer demand in Wayne.
Northern New Jersey Home Seller Guide
Planning to sell your home and want to understand today’s market first.
Northern NJ Housing Market Update For Week Of: October 27 - November 23, 2025
How each Northern NJ county is performing.
Want Local Updates Like This Each Week?
I share short, data-driven updates focused on Northern NJ counties and offer advice and opinionated news.
If you would like these updates delivered straight to your inbox.
