Will Mortgage Rates Go Down After No Cut by Fed in June 2025?

It looks like mortgage rates might not take a big dive right after the Federal Reserve decided on June 18, 2025, to keep their main interest rate steady between 4.25% and 4.5%. From what I'm seeing, there's a chance we could see some decreases later in 2025 because the Fed is talking about making two small cuts to interest rates. But, whether that actually happens and when will really depend on how well inflation cools down and what the overall economy does. There's some debate among the experts, and a few think that high inflation could even push those rate cuts further down the road.

Will Mortgage Rates Go Down After No Cut by Fed in June 2025?

Understanding the Fed's Latest Move

On June 18, 2025, the Federal Open Market Committee (FOMC), which is the group within the Federal Reserve that makes decisions about interest rates, announced that they would keep the federal funds rate where it is, between 4.25% and 4.5% (Federal Reserve FOMC Statement June 18, 2025). This rate is what banks charge each other for lending money overnight. Even though it's not the same as mortgage rates, it has an impact on them and other borrowing costs in our economy.

This decision tells me that the Fed is being careful. They want to see more evidence that inflation, which is still a bit too high, is really coming under control. They're also probably keeping an eye on how the economy is growing, especially with things like the new tariffs that were recently introduced.

What's interesting is that even though they kept the rates the same, the Fed's own forecasts, often shown in what's called a “dot plot,” suggest they still expect to make two small quarter-point (0.25%) rate cuts before the end of 2025. However, they also upped their prediction for inflation in 2025, now thinking it will be around 3%, which is higher than the 2.7% they thought back in March. This makes me think those planned rate cuts aren't set in stone and could be pushed back if inflation doesn't cooperate.

How This Affects What You Pay for a Mortgage

Right now, mortgage rates are sitting at a level that's lower than the highest we've seen recently, but still pretty high when you look back over the years. For example, the average rate for a 30-year fixed-rate mortgage is somewhere between 6.81% and 6.89% as of June 18, 2025. A 15-year fixed-rate mortgage is averaging around 5.96%. To put this in perspective, back in March 2022, you could get a 30-year fixed rate for around 4.29%, so we've seen a pretty significant jump since then.

Here's a quick look at the current situation:

• 30-year fixed-rate mortgage: 6.81% – 6.89% (down a bit from a high of 7.16% in May 2025)
• 15-year fixed-rate mortgage: 5.96% (a little lower than last year's 6.13%)

The fact that mortgage rates have dipped a little recently isn't necessarily because of anything the Fed has directly done. It often has more to do with what's happening with U.S. Treasury bond yields and how much demand there is for mortgage-backed securities. This shows you that mortgage rates are influenced by a lot of different things, not just the Fed's main interest rate.

What the Experts Are Saying

I've been reading what various economists and analysts are thinking, and it's a mixed bag, to be honest. Lawrence Yun, who is the chief economist at the National Association of Realtors, doesn't think we'll see mortgage rates go down much in the near future because inflation is still a concern and there's a lot of uncertainty in the economy.

On the other hand, David Kelly from JPMorgan Asset Management believes that even though the Fed is signaling they might hold rates higher for a while, the market is already expecting future rate cuts. This expectation could actually push mortgage rates down a bit later in the year (The Street).

However, some analysts at Barclays are suggesting that if inflation stays stubbornly high, the Fed might only end up making one rate cut in 2025, which would mean less relief for people hoping for lower mortgage rates. Looking back at 2024, the Fed actually cut rates three times, but mortgage rates still bounced around quite a bit, which reminds us that other economic factors play a big role.

More Than Just the Fed: Other Things That Move Mortgage Rates

It's crucial to remember that the Fed's federal funds rate is just one piece of the puzzle when it comes to mortgage rates. The yield on the 10-year U.S. Treasury note is another really important factor. Mortgage rates often follow the trend of these Treasury yields. The recent small decrease in mortgage rates, even with the Fed holding its rate steady, suggests that things like lower Treasury yields or maybe more people wanting to invest in mortgage-backed securities are having an influence.

Here are some of the key things that will be shaping where mortgage rates go in the coming months:

• How Inflation Is Doing: If prices start to rise at a slower pace and get closer to the Fed's 2% goal, then we're more likely to see those planned rate cuts happen, which could lead to lower mortgage rates towards the end of 2025. But if inflation stays around 3% or even higher, the Fed might hold off on those cuts, keeping mortgage rates higher.
• The Speed of Economic Growth: The Fed is worried that the economy might slow down, partly because of new tariffs. If the economy does slow more than expected, it could push Treasury yields down, and that might put some downward pressure on mortgage rates.
• What's Happening in the Market: How many investors want to buy mortgage-backed securities and how Treasury yields are moving up or down will continue to affect mortgage rates, sometimes even regardless of what the Fed decides to do.

This whole situation is pretty complex, and it shows why it's hard to predict exactly what will happen with mortgage rates. It really depends on a combination of what the Fed does and what's happening with the broader economy.

Looking Ahead: What This Means for You

For the time being, with the Fed keeping rates steady, I don't expect to see any big drops in mortgage rates right away. The fact that the Fed is still talking about making a couple of small rate cuts later in 2025 does offer some hope that we might see rates come down a bit. If those cuts happen, it could bring the federal funds rate down to somewhere between 3.75% and 4.0%, which would probably lead to lower mortgage rates. However, we need to see the economic data, especially inflation numbers, to know if and when that will actually happen.

So, while there's a possibility of mortgage rates easing later in 2025, I think it's more likely they'll stay around where they are now, or maybe even edge a bit higher in the short term, unless the economic news starts to show a clear cooling of inflation.

My Advice for Anyone Thinking About Buying or Refinancing

If you're looking to buy a home right now, it's a tricky situation. Rates around 6.81% are definitely better than the recent highs, so if you find a home you love and the numbers work for your budget, it might be worth considering locking in a rate. It's hard to say for sure if rates will go much lower in the near future.

If you already own a home and have a mortgage with a higher interest rate, it makes sense to keep an eye on where rates are headed. If the Fed does follow through with those rate cuts later in 2025 and mortgage rates drop below your current rate (taking into account any costs associated with refinancing), it could be a good opportunity to save some money on your monthly payments. Staying informed about inflation and any announcements from the Federal Reserve will be key to knowing when might be the right time to act.

In Conclusion

To sum it up, the Fed's decision on June 18, 2025, to hold interest rates steady means we probably won't see an immediate drop in mortgage rates, which are currently around 6.81% to 6.89% for a 30-year fixed loan. While there's still a possibility that mortgage rates could decrease later in 2025 if inflation cools down and the Fed makes its planned rate cuts, it's a situation we'll need to watch closely. For now, it seems like mortgage rates will likely remain at their current levels, and anyone looking to buy or refinance should carefully consider their options and stay informed about economic developments.