As we close out the year, many buyers are asking the same question:
If the Federal Reserve cut rates again, why didn’t mortgage rates fall?

The answer is important — and it highlights why today’s market is quieter, but potentially more favorable, than many people realize.

Why Mortgage Rates Didn’t Drop After the Fed Cut

The Federal Reserve recently delivered its third rate cut of 2025, bringing the Fed Funds rate into the 3.50%–3.75% range. While the cut itself was expected, the tone of the announcement mattered more than the move.

Markets had already priced in the rate cut well in advance. Instead of reacting to the decision, investors focused on the Fed’s message, which suggested a slower pace of future cuts. As a result, mortgage rates remained relatively steady rather than moving lower.

This reinforces a key point many buyers overlook:
Fed cuts do not automatically translate into lower mortgage rates.

Mortgage rates are driven primarily by long-term bond markets and investor expectations, not just short-term Federal Reserve actions.

What Stability Means for Buyers Right Now

While rates did not drop further, they are holding near the lowest levels seen this year. That stability, combined with current market conditions, is creating leverage for buyers.

Compared to this time last year:

• Inventory levels are higher
• Buyer demand has not fully returned
• Competition remains more muted

This environment often allows buyers to negotiate more effectively on price, terms, and concessions — opportunities that tend to disappear once demand accelerates.

The Bigger Risk Isn’t Rates Going Up Tomorrow

Many buyers are waiting for rates to drop further. Historically, that strategy can be risky.

The greater risk in today’s market is waiting until more buyers realize rates are stable, confidence returns, and competition increases. When demand picks up, leverage shifts quickly, even if rates move only modestly.

Buying during a period of rate stability allows buyers to focus on value, selection, and negotiation. If rates improve in the future, refinancing remains an option. Lost leverage does not.

Bottom Line

This is not a market driven by urgency or speculation. It is a market that rewards preparation, clarity, and decisive action.

For buyers who are financially ready and focused on long-term ownership, today’s conditions quietly present an opportunity that may not be as available once demand returns in force.

Understanding how mortgage rates, inventory, and buyer behavior intersect locally is critical to making confident decisions in this environment.

About the Author

Michael Hankerson is a licensed mortgage broker with First Link Mortgage and the founder of Hankerson Team, Luxury Division. He works with buyers to align real estate strategy and financing into a single, informed approach.

NMLS #2664119

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