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# The Fed Cut Rates 0.25% — Will Mortgage Rates Drop Now?
- URL: https://www.mortgagemomradio.com/the-fed-cut-rates-0-25-will-mortgage-rates-drop-now/
- Published: 2025-09-17T21:33:57.000Z
- Updated: 2026-09-04T17:10:07.000Z
- Description: The Fed's first cut of 2025 landed — and mortgage rates barely moved, because rate sheets priced it in weeks ago. Debbie reads the Fed's statement on air, explains Powell's take on the housing shortage, when a refinance makes sense, and how often you can actually refinance.
- Author: Deborah Marcoux
- Tags: Podcast, Mortgage Mom Radio, #episode-backfill

Mortgage Mom Radio • “Fed Cut Rates 0.25% – How are the markets reacting to the decision?” • Live show from Wednesday, September 17, 2025 • 44 minutes • Hosted by Debbie Marcoux, NMLS #237926

The Federal Reserve cut its benchmark rate by a quarter point today — the first cut of 2025 — and mortgage rates barely flinched. On this episode, recorded about an hour after the announcement, Debbie reads the Fed's full statement on air, explains why the cut was already built into mortgage rate sheets weeks ago, shares what Jerome Powell said about the housing shortage, and answers a listener question most borrowers get wrong: how often can you actually refinance?

## Key takeaways

- **The Fed cut a quarter point, to a target range of 4–4.25%.** The committee is signaling at least two more cuts this year, with a possibility of three — Debbie's read is two.
- **Powell said it himself: the Fed has no control over mortgage rates.** Cuts “work their way into” rate sheets over time — and this one was priced in weeks in advance, which is why the last three weeks of rate gains simply held steady today.
- **One dissent:** one committee member voted against the action, preferring a half-point cut. Debbie would have liked the half point too — “rip off the band-aid” — but understands why the Fed moves in slow increments.
- **The dual mandate is now a 50/50 concern.** Inflation used to weigh heaviest; the Fed now says jobs and inflation worry it equally. The labor market is stagnant — companies are neither hiring nor firing — but unemployment remains low and people are paying their bills.
- **No housing crash coming, per Powell:** the U.S. has a housing shortage. Sellers have equity, so they sell before foreclosure, and banks now have loan-modification programs built after 2008\. Default notices are up, but nowhere near Great Recession levels.
- **Refinance rule of thumb:** if rates are at least three-quarters of a percent better than your current rate — or you have debt to consolidate or improvements to fund — run the numbers now. Rates should keep improving, and you can refinance again later.
- **Ballpark pricing as of today (everyone's rate differs):** conventional purchase around 6.5–6.75%; FHA around 5.625–6%. A 720+ score can lock an FHA or VA purchase near 5.625% at zero points; around a 600 score, the same loan runs closer to 6–6.25%.

## Chapters

- 01:00Rate cut day — and three weeks of gains are holding
- 04:00Reading the Fed's statement on air
- 05:00Jobs and inflation now weigh equally
- 08:00The vote — and the dissent for a half-point cut
- 09:00“Rip off the band-aid”: Debbie on quarter-point increments
- 11:00Should you wait for more cuts? They're already priced in
- 12:00Powell on jobs: not hiring, not firing
- 13:00Why housing won't crash: shortage, equity, loan mods
- 16:00When a refinance makes sense: the ¾-point rule
- 20:00How a 2-1 buydown works at today's rates
- 23:00Why every borrower gets a different rate
- 26:00How far rates have come since May 2024
- 32:00Q&A: how often can you refinance in a year?
- 38:00Prepayment penalties on investment properties
- 41:00Wrap-up: what next week's show will watch

## Questions answered on this show

### “How often in a year are you able to refinance?”

On a primary residence or second home: as often as you want. Federal consumer-protection rules prohibit prepayment penalties on primary-residence mortgages regardless of loan type, so technically you could refinance the day after closing. Investment properties are different — some programs offer a lower rate in exchange for an optional 1-, 2-, or 3-year prepayment penalty, so always ask whether one is attached (Debbie doesn't write them unless a client requests one to buy the rate down). One human note from behind the scenes: loan officers are paid almost entirely on commission, and if a loan pays off before six payments are made, the officer's entire commission on it is clawed back. If rates drop right after you close, call the person who did your loan and give them the chance to do the next one.

## This week's numbers (week of September 17, 2025 — averages, not quotes)

- Fed funds target: **4–4.25%** after today's quarter-point cut — the first cut of 2025, with at least two more signaled this year
- Conventional 30-year purchase: roughly **6.75%**, possibly as low as **6.5%**
- FHA purchase: roughly **5.625–6%** depending on scenario — about **5.625%** at zero points with a 720+ score; closer to **6–6.25%** around a 600 score
- 10-year Treasury: holding steady after the announcement — the cut was already built into pricing

*Your rate depends on FICO score, property type, loan balance, and loan purpose. These are national conforming averages for context, not a quote.*

### Wondering what today's cut means for your loan?

Call [844-935-3634](tel:8449353634) (844-WE-LEND-4), [start an application](https://www.mortgagemomradio.com/apply/), or run your numbers with the [mortgage calculators](https://www.mortgagemomradio.com/tools/). Get the weekly rate rundown in the [newsletter](https://www.mortgagemomradio.com/newsletter/).

Full transcript (lightly edited for clarity) 

*Auto-generated captions cleaned for readability. Sponsor messages, commercial breaks, and repeated housekeeping have been trimmed; licensing information appears at the bottom of this page.*

### Rate cut day — and the gains are holding

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom — and that disclaimer just keeps getting longer, because I've added quite a few new states. How exciting — we can help you in many more areas than we used to, so keep reaching out with your questions.

I can see Armando's already jumped on and said “exciting news.” It was very exciting news. It was a good day. I have the Fed's statement here, and I watched the entire press conference, so I'm going to dumb it down for you. As I said in my text message, we did get a quarter point lower in rate, which is fantastic. And it was actually very enlightening: somebody asked how the Federal Reserve rate cut was going to affect mortgages, and it was nice to see Jerome Powell get on there and talk about how they have absolutely no control over mortgage rates — the Federal Reserve does not control those — which I've been telling you for quite some time. But the rate cuts do happen to work their way into our mortgage rate sheets.

What I took from the press conference: we're going to get at least two more rate cuts this year, with the possibility of maybe three before the end of the year. I'm not feeling the three — I feel like we've got two more to go. But that is all very positive news, and it sent the market running.

Our interest-rate gains from the last three weeks are holding steady. I haven't seen anything up to this minute that would indicate rates are going the wrong direction. We're gaining a little bit in basis points, and the 10-year Treasury is holding steady. So for anybody worried that today's announcement was going to make or break these nice rate gains — it did not. I said it on last week's show: everybody was counting on a quarter-point cut, and they'd already built it into the rate sheets. If we got that quarter point, I didn't expect any crazy changes — and that's exactly what's happening. I would have liked a bigger cut, but I'm very happy they cut, because it could have gone very badly had they held steady instead.

### Reading the Fed's statement

Let me read the Federal Reserve's announcement for you — and yes, it's going to look like I'm reading, because I am. It says: “Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.”

That's one thing we'll talk about from the press conference — unemployment has edged up, and job hiring and job firing are remaining the same. Continuing: “In support of its goals, and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by a quarter percentage point, to 4 to 4-1/4 percent. In considering additional adjustments to the target range, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”

One of the things they talked about in the press conference: before, their strongest objective was inflation. That was the thing they wanted to get down the very most — it weighed the most against concern for the unemployment and jobs numbers. They are now saying jobs and inflation are 50/50 in concern.

The statement goes on: “In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”

### The vote — and the case for a half point

I thought it was important to read you who was making the judgment calls. Voting for the action were Chair Jerome Powell, Vice Chair John Williams, and the rest of the committee's voting members. Voting against it was one member who preferred to lower the target range by a half of a percentage point at this meeting — he was a big pusher that a quarter percent was not enough.

I would have liked to have seen a half percent too. If we know we're going to lower the rate at least two more times before the end of this year, why go quarter, quarter, quarter? I'm personally a believer in ripping off the band-aid. When they were raising rates over the course of two years — half point, quarter point, three-quarter point, meeting after meeting — it was like, why didn't you just throw us up to the number you wanted, slow us down completely, get us back under control, and then start lowering? Now, I get it. In slow increments, because moving too fast could have completely tanked our economy. But I'm one of those people: if you're going to hurt me, punch me in the arm as hard as you can — just do it once.

Either way, the quarter point came. It was what we were expecting, it did not throw the market off, and mortgages are still sitting in the same place with all the gains of the last three weeks intact.

### Should you wait for more cuts?

So what does this mean for all of us? What does it mean for rate sheets, for buying a home, for doing a real estate transaction right now? Should you be refinancing? Purchasing? Waiting for them to keep cutting?

I've said this before and I'll say it again: when we know a rate cut is coming, well in advance, we build those cuts into our rate sheets ahead of time — the last three weeks are the example. Do I think rates will continue to slowly improve between now and the end of the year? Yes. Do I think we'll see a massive, crazy, super-quick change? No. We're not dropping from six and a half to five and a half within the next three months. But I do see rates continuing to improve over the next three months. So should you wait? No, you shouldn't.

### Powell on jobs and housing: why there's no crash coming

When the mortgage-rate and housing-market questions were asked at the press conference, the chairman was very clear. Unemployment right now is still at extremely low levels. The jobs issue is that companies are not firing and they are not hiring — people in their jobs are remaining stagnant. And that's okay, because people aren't losing jobs. They're working, they have income, they're paying their bills, and the economy is staying strong. What happens in a good, strong economy? People continue to buy homes.

And the reason prices are so high — straight from the Federal Reserve today, out of Jerome Powell's mouth — we have a shortage of housing. We have a housing crisis. I've been saying this for years on this show: when we don't have enough housing for the number of residents we have, it is very difficult for housing to crash.

The other thing is that sellers have equity. Even people who are struggling and behind on payments have equity, so they're not going to just go to foreclosure — they'll sell before they lose the home and take their equity, or go to their bank and work on a modification. One positive that came out of the 2007–2009 housing crisis is that the banks learned how to work with people who were struggling, and built loan-modification programs and policies into their organizations. So even though notice-of-default rates have started to go up — yes, they have — are they anywhere near the numbers we saw during the Great Recession? Not even close. People aren't losing homes right now. We have a housing shortage, period, end of story.

With mortgage rates improving — which they have done and will continue to do — housing is going to move to the forefront of people's minds. More people thinking about it means more people acting; more people acting means more transactions. So we're not going to see housing prices take a total crash. What we've seen is housing calm down: a lot of reduced prices, homes taking longer to sell — but not a huge decrease in pricing, and we're not going to see one. Rates coming down will help the housing market.

So should you wait to buy? No. Get in before home values start appreciating again — they've been holding stagnant — and before prices start going up further.

### When a refinance makes sense

And you should refinance as interest rates continue to come down. If you have a loan and you need debt paid off, home improvements, or a consolidation — if rates are at least three-quarters of a percent better than the rate you have today, you should be looking at refinancing. Even if it's just your current loan. If you're consolidating debt, look at what you're paying in interest overall; take the money, get the debt paid off — because rates will continue to come down, and we'll have the opportunity to refinance that loan again in the very near future.

Nicholas jumped on: “Hello, Debbie. Can't wait to call you later and get this refinance of my house going.” Nicholas is a great example. He's got some debt and a very low rate on his current mortgage — but when we put all the numbers together, with a new refinance paying off the debt into one monthly payment, his monthly cash flow is significantly better, and it puts cash in hand today while setting him up to do a lower-rate refinance again in the future. There are many of you in that same situation.

### How a 2-1 buydown works at today's rates

I ran an old commercial today on purpose — one I filmed back in May of 2024 — about a program called a 2-1 buydown for buyers. The idea: if the market rate today is 7%, you'd start your first year at 5%, year two at 6%, and years three through thirty at that 7%. It's a way to enter the market with a reduced payment in the early years while you wait for rates to improve enough to refinance.

At the time I filmed it, conventional rates were in the sevens and FHA was right around 7%. Today — and again, every single person gets a different rate quote; not one person gets the exact same quote — a conventional loan would be somewhere around 6.75%, possibly as low as 6.5%, and FHA around 5.625% to 6% depending on your scenario. With a 2-1 buydown on a purchase, you'd start 2% below your note rate.

Say the average rate across all the programs — FHA, VA, conventional, jumbo, every down payment — is 6.25%. Year one you're at 4.25%. Year two you're at 5.25% — which is realistically about where the market may be in twelve months, and in that second year we most likely have the possibility of refinancing into a 30-year fixed around that level before your buydown steps up. If that works out, you never actually paid today's rate. And if rates go up instead and we're all wrong? You have a 30-year fixed at 6.25% — you knew on day one what the payment would be for years three through thirty, and you're prepared for it. That's the difference from an adjustable-rate mortgage, which can move and bounce after the fixed term. A 2-1 buydown is a great product on conventional, FHA, or VA — and this is for purchases, not refinances.

### Every borrower gets a different rate

If your credit score is 800, you'll be quoted a different rate than somebody at 600 — you're a different risk factor. The lower the score, the higher the risk. Example: on an FHA purchase with a 720-or-better credit score, realistically today you can lock a 30-year fixed at zero points — no points paid — around 5.625%. With a 600 score, that same FHA or VA loan is more than likely going to price around 6% to 6.25%.

Can I do a loan for somebody with a bankruptcy just two years ago — or one year with extenuating circumstances, if you've rebuilt credit? Yes. Can I do a 580 credit score, even 560, on an FHA purchase or refinance? Yes. But the interest rate is going to reflect the risk. A previous foreclosure, a low score — you'll get a higher rate than somebody with great credit. So as I talk about rates, understand I'm giving you averages, not your quote. And if you hear a number and think “I can totally get better somewhere else” — shop me. I dare you. I'm very aggressive, and I'd love the opportunity to talk numbers with you.

### How far we've come since May 2024

Here's the difference. In May of 2024 I was talking about an FHA rate around 7% — and that was with a great credit score, on a purchase, no cash out. Today I'm talking about 5.625%. That is how much we've improved. Nobody's really noticed, because it's been a slow escalator down for about a year and a half — but it has been getting better, and you've got opportunities today that you didn't have then.

You may be thinking: I can't do this, I can't afford it, I can't refinance, rates are too high, I can't get things consolidated. You absolutely can. If you're looking at a pre-approval to purchase, you most likely qualify for more today than you did back then. Get on the phone, start asking, and let's see what we can do for you.

And should you be waiting? No. Rates are going to continue to improve, and that's going to spark the market. You don't want to be late — start looking now, before everybody else catches on that things are getting more affordable. Whether you're buying, selling, refinancing, or looking at a reverse mortgage, I have real estate agents I work with all over — throughout Southern California, Arizona, Nevada, Florida — and we'll make sure you're getting credits from our agents toward your closing costs, which helps you get into a home with less money out of pocket. If you need to sell at a discounted fee, we'll help with that too.

Mike jumped on and said: “Interest rates go down, prices go up.” Mike, you are absolutely right — and you're in New Jersey, where I'm not licensed, but I could get you a referral to somebody who can help you. Love the comment.

### Q&A: how often can you refinance?

A viewer asks: *“How often in a year are you able to refinance?”*

Great question, and a lot of people don't know this, so I'm going to spill the tea. If you are buying or refinancing a primary residence, there are rules from the CFPB that say we cannot put a prepayment penalty on a mortgage on your primary residence. It doesn't matter what type of loan — it's not legal to give you a prepayment penalty. That means you could refinance the day after you close on a brand-new loan.

Now let me be 100% honest about how this works on my side. I don't make an hourly wage or a salary of any kind — if I don't close a loan, I don't get paid. I'm 100% commission, and that's how nearly all loan officers in mortgage are paid. If you refinance a loan I closed and pay it off before you've made six mortgage payments, the entire commission gets pulled back from me. Your loan application and transaction is probably 60 to 80 hours of work from start to finish behind the scenes — evenings, weekends, holidays.

So when you do that refinance, all I'd recommend: remember that the person who did your loan has absolutely zero control over mortgage rates dropping. If they locked you at a great rate at the time, they did a great job for you. If rates drop right after closing, call that person back: “You did a great job for me, but I'm seeing rates dropped again — is there any way we could refinance the loan you just closed?” When people do that for me, I'm honored and beyond grateful — because even if I lose what I earned on the first loan, I have the opportunity to do the second one. Something is better than nothing.

So: owner-occupied property, you can refinance as often as you want, no prepayment penalties. If somebody tells you that you can't do it for six months, now you understand why they're telling you that — and it's not true. The rules say you can refinance whenever you want. A second home is just like a primary residence: no prepayment penalties.

### Prepayment penalties on investment properties

Investment properties are different. When I set up mortgages, I do not write prepayment penalties — so you'd be able to refinance as many times as you want. But there are many mortgage companies and loan programs that offer a discounted, lower rate if you're willing to take a prepayment penalty on an investment property. You can still refinance whenever you want — but you'll pay that penalty as part of your loan payoff if you refinance before it expires. They come in one-, two-, and three-year increments on the programs I work with.

Make sure you're reading the fine print and asking the loan officer whether the mortgage they're setting up has a prepayment penalty. Some clients ask me for one on purpose: “Can you give me a prepayment penalty to lower this rate? I qualify today, I'm going self-employed next year, and it'll take two years of tax returns before I can qualify again.” That's their choice — we talk about it, I quote it, and the client decides. But if you're hearing an interest rate much lower than everyone else's quote on an investment property, ask that question.

### Wrap-up

So today was a great day, and a great meeting. Next week we'll talk about what comes of today's rate cuts — do rates get better again for a fourth week in a row, or do we get a little uptick? Markets don't go down, down, down forever; we usually go down, down, down, up. Let's see what we get.

I'm here every single Wednesday at 1:00 p.m. Pacific. If you want to know when I go live and don't want to count on YouTube notifications, text the word LIVE to 844-935-3634 — that's 844-WE-LEND-4, and it's also the office number if you'd like to talk with me or the team. If you've been thinking about doing something — buying, selling, refinancing, a reverse mortgage, a home equity line of credit — reach out. Happy to run the numbers and determine whether it makes sense or whether you should wait longer. The math doesn't lie: I'll show you how it works out, and then you decide. You're in control. Have a fabulous rest of your week.

Debbie Marcoux is licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act, NMLS ID #237926, and additionally licensed in AZ (0941504), FL, GA, HI, ID, IL, NV, NC, OR, TN, TX, and WA. Rates and figures discussed were current as of the air date of September 17, 2025, reflect national conforming averages, and are not an offer of credit or a rate quote. Debbie Marcoux is not a financial advisor; consult qualified professionals about your individual situation.