With the Federal Reserve Open Market Committee's quarter-point cut to its Fed funds rate on Sept. 17, fixed mortgage rates could fall, too. Many borrowers wonder whether they should lock in rates now or wait for further declines. Shortly before the Fed acted, German Rueda Restrepo, a mortgage specialist at Tropical Financial, offered these insights for home buyers.
Q: Is now a good time to lock in a mortgage, or should I wait a bit longer to see if rates come down?
A: Think of buying a home this way: Marry the house, date the rate. Prioritize the property as a long-term investment. Enjoy making the home yours, building equity, and possibly benefiting from appreciation over time. Mortgage rates rise and fall. If they significantly drop in the coming years, you can refinance.
The Open Market Committee improved borrowing conditions for everyone when it lowered the Fed funds rate. Short-term rates are impacted the most, while long-term rates, such as the 10-year Treasury yield, have a greater influence on fixed-rate mortgages.
The Intercontinental Exchange, a Fortune 500 company, earlier predicted that the 30-year fixed rate could fall to 6.3% in January from around 6.6% earlier this year. CBS News sources anticipate a slight improvement in September, with potentially larger drops expected later in the fall. Others believe that mortgage rates may remain steady even with a Fed rate cut. The truth is that no one really knows.
Q: So, are we in a no-man’s land for mortgages?
A: Opportunities arise even in uncertain times. Buyers who moved forward during high-rate periods often gained equity that changed their lives, while those who refinanced during low-rate markets improved their cash flow and financial strength. Today is no different. Rates may seem higher now, but they have remained moderate over the past few decades.
More importantly, a sound mortgage strategy is more than just securing the lowest rate; it’s about timing, goals, and long-term stability.
Q: When during the next month or two should a buyer lock in the mortgage rate?
A: That depends on your personal comfort level. If you’re under contract for a home or preparing to refinance and the current payment quote fits your budget, locking in the rate eliminates uncertainty and protects you from surprises before closing. That sense of stability is very valuable.
Lock in when the numbers work for you, not when you think you’ve outsmarted the market. A good mortgage isn’t just about securing the lowest rate; it’s about creating a manageable monthly payment and a plan aligned with your long-term goals. Lock in when your peace of mind outweighs the risk of waiting.
Conversely, if your closing date is still far off or you’re comfortable with some risk, you might consider waiting to see if market conditions improve in your favor. Rates fluctuate daily, so no one can predict the exact turning point.
Q: What are the practical considerations for locking in now vs waiting?
A: If you're 30 to 60 days from closing, locking in your rate can provide peace of mind, helping to avoid last-minute price surprises that could affect your monthly payments. Locking in can also prevent small payment increases that can cause issues with loan approval. Borrowers with less-than-perfect credit or those who have faced tough loan approvals may find locking their rate particularly helpful, as it shields them from potential rate hikes that could disqualify their application.
Similarly, first-time homebuyers in competitive markets often find that locking their rate gives them greater confidence when making offers and strengthens their position with sellers who want certainty around closing.
Q: What’s your final bit of advice for borrowers?
A: If you’re a few months away from closing or still working on getting a signed contract, taking a bit more time before locking in might give you more flexibility. If your budget can handle a small rate increase without throwing off your plans, waiting might be a good idea, as it gives you a chance to see if market conditions improve.
That said, waiting is only smart if you have the option and patience. If your closing date is flexible, say out 60 days or more, you can wait for small rate improvements. That will give you time to boost your credit score, reduce debts, and save for a larger down payment. Each can strengthen your borrower profile, qualifying you for a better rate or lower fees, even if market rates remain unchanged.
If you are ready to finance a new home now, click here to apply for a mortgage with Tropical Financial. The credit union is running a special of $1,000 off closing costs through the end of September 2025.