The Federal Reserve recently cut interest rates by 0.25%, bringing the Fed Funds rate down to 4.25%. It’s the fourth rate cut since September, dropping rates a total of 1%. But here’s the thing: while this helps short-term loans like auto loans and home equity lines, it hasn’t done much for mortgage rates. In fact, they’ve gone up. The 10-year Treasury Note, which heavily influences mortgage rates, spiked from 3.66% to 4.55% during this same period. If you were hoping for lower borrowing costs on a home, you’re probably feeling the squeeze instead.

The reason? Inflation. It’s the big, ugly word behind a lot of today’s market challenges. Fed Chair Jerome Powell admitted in his latest press conference that they’re frustrated with how slowly inflation is coming down. That uncertainty has shaken the markets, driving rates higher. So, even though the Fed is cutting rates, inflation is keeping mortgage costs high.

The Fed also updated its economic outlook, and the takeaway is that we might see stronger growth and lower unemployment in 2025—but also slightly higher inflation. Because of that, they’ve scaled back their rate cut predictions for next year from four cuts to just two. Of course, if unemployment starts to climb, they’ve hinted they’ll act faster to adjust.

So what does all this mean if you’re thinking about buying or selling a home? The reality is that affordability is tight right now, but there are ways to make it work. Focus on monthly payments rather than just the purchase price—this is where interest rate buy-downs can really shine. If you’re already a homeowner, keep refinancing on your radar for when rates start to improve. And as always, stay flexible and informed. The market moves fast, and making small tweaks to your strategy can go a long way.

At Adam Timothy Group, we’re here to help you navigate it all. We know the headlines can feel overwhelming, but you don’t have to figure it out alone. Whether you’re buying, selling, or planning your next step, we’re with you every step of the way to turn challenges into opportunities. Let’s make it happen together.

Sources:

• Federal Reserve Economic Projections and Rate Decisions
• Market analysis and insights from Barron’s and Investopedia.