What a Fed Rate Cut Could Mean for Mortgage Rates and for Homebuyers and Sellers in Rancho Cordova

What a Fed Rate Cut Could Mean for Mortgage Rates and for Homebuyers and Sellers in Rancho Cordova

The Federal Reserve (The Fed) meets this week, and expectations are high that they’ll cut the Federal Funds Rate. The official announcement will be made on September 18, 2025. But does that mean mortgage rates will drop? Let’s clear up the confusion – and see what this means for both buyers and sellers in today’s Rancho Cordova housing market.

The Fed Doesn’t Directly Set Mortgage Rates

Right now, all eyes are on the Fed. Most economists expect they’ll cut the Federal Funds Rate at their mid-September meeting to try to head off a potential recession.

According to the CME FedWatch Tool, markets are already betting on it. There’s virtually a 100% chance of a September cut. And based on what we know now, there’s about a 92% chance it’ll be a small cut (25 basis points) and an 8% chance it will be a bigger cut (50 basis points).

So, what exactly is the Federal Funds Rate? It’s the short-term interest rate banks charge each other. It impacts borrowing costs across the economy, but it’s not the same thing as mortgage rates. Still, the Fed’s actions can shape the direction mortgage rates take next.

Why Markets Already Saw This Cut Coming

Mortgage rates tend to respond to what the financial markets think the Fed will do—before the Fed officially acts. Basically, when markets anticipate a Fed cut, that outlook gets priced into mortgage rates ahead of time.

That’s exactly what happened after weaker-than-expected jobs reports on August 1 and September 5. Each time, mortgage rates ticked down as financial markets grew more confident a cut was coming soon. And even though inflation rose slightly in the latest CPI report, the Fed is still expected to make a cut.

So, if the Fed goes with a 25-basis point cut, as expected, that’s likely already baked into current mortgage rates, and we may not see a dramatic drop.

But if they go bigger and drop their Federal Funds Rate by 50 basis points instead, mortgage rates could come down more than they already have.

So, Where Do Mortgage Rates Go from Here?

While the upcoming cut may not move the needle much, many experts expect the Fed could cut the Federal Funds Rate more than once before the end of the year. Of course, that’s if the economy continues to cool.

As Sam Williamson, Senior Economist at First American, explains:

“For mortgage rates, investor confidence in a forthcoming rate-cutting cycle could help push borrowing costs lower in the back half of 2025, offering some relief to housing affordability and potentially helping to boost buyer demand and overall market activity.”

If multiple rate cuts happen, or even if markets just believe they will, mortgage rates could ease further in the months ahead. But here’s the catch – all of this depends on how the economy evolves. Surprise inflation data or unexpected shifts could quickly change the outlook.

What This Means for Buyers in Rancho Cordova

For homebuyers, lower mortgage rates could be a game-changer.

• Improved affordability: Even a small rate drop can make monthly mortgage payments more manageable.

• Better buying power: Lower rates allow buyers to qualify for more home without stretching their budget.

• Timing advantage: Acting while rates are trending down could lock in savings before demand pushes competition higher.

If you’ve been waiting on the sidelines to buy a home in Rancho Cordova, now may be the time to revisit your strategy. Partnering with a local expert like Sac Platinum Realty can help you understand what’s possible in this changing market.

What This Means for Sellers in Rancho Cordova

Lower mortgage rates don’t just benefit buyers—they can create major opportunities for homeowners looking to sell.

• More buyers enter the market: As affordability improves, more buyers are likely to start house hunting in Rancho Cordova. That increase in demand can help homes sell faster.

• Potential price stability (or growth): If buyer activity rises, sellers may have more leverage in negotiations and may see stronger offers.

• Timing matters: Listing before the next wave of buyers floods the market could put you in a stronger position to attract serious interest while inventory remains relatively tight.

If you’ve been thinking about selling your home in Rancho Cordova, this rate environment could give you an edge. Partnering with Sac Platinum Realty ensures your property is priced strategically, marketed to the right buyers, and positioned for maximum exposure in this shifting market.

Key Takeaways for Rancho Cordova Buyers and Sellers

Mortgage rates likely won’t drop sharply overnight, and they won’t mirror the Fed’s moves one-for-one. But if the Fed begins a rate-cutting cycle, and markets continue to expect it, mortgage rates could trend lower later this year and into 2026.

For Rancho Cordova homebuyers, that could mean more affordability and opportunity. For sellers, it could mean more buyer activity and stronger demand for well-priced homes.

If you’ve been waiting and watching the market, now’s the time to talk strategy. Connect with Sac Platinum Realty today to understand how changing mortgage rates could impact your next move.