Will Mortgage Rates Drop Soon? Here’s What the Fed Just Said

On July 30th, the Federal Reserve wrapped up its latest meeting and decided to leave interest rates unchanged. That means no increase, and no decrease, for now.

In their statement, the Fed acknowledged that the economy is growing, but at a slower pace. They noted:

“Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”

In plain terms? The job market is still strong, inflation is still higher than they’d like, and the overall economy isn’t booming, but it’s not stalling either.

So, what does this mean for mortgage rates?

While the Federal Reserve doesn’t directly set mortgage rates, its decisions heavily influence them. Mortgage rates tend to follow long-term bond yields, which are affected by expectations around inflation and Fed policy. Since the Fed held steady, mortgage rates haven’t dropped yet, but this decision does keep the door open for a possible decrease later this year.

At a press conference after the meeting, Fed Chair Jerome Powell said:

“We have made no decisions about September. We don’t do that in advance.”

That means the Fed is still watching the data. If inflation continues to cool and the economy slows further, a rate cut could come as soon as the next meeting on September 16–17. And if that happens, we could see mortgage rates follow suit—potentially giving homebuyers a break.

What This Means for Buyers and Sellers

• For Buyers: While waiting for lower rates might sound appealing, keep in mind that if rates do drop, more buyers are likely to jump into the market—leading to increased competition. Buying now could mean less competition and more negotiating power. Plus, if rates go down in the future, refinancing is always an option.
• For Sellers: Buyer demand could rise if rates drop, so now is a smart time to prepare your home for the market. A potential fall rate cut could bring a new wave of motivated buyers.