Will mortgage rates drop after this week’s Fed meeting?

For the first time since April, the Federal Reserve will meet this week to discuss interest rate policy, among other agenda items. And there will be plenty to evaluate. With developments surrounding overseas conflicts and geopolitical tensions, a strong employment report and a surging inflation rate, the central bank finds itself juggling multiple simultaneous priorities this month. And while there’s no interest rate cut expected this week, that doesn’t mean that the interest rate climate still won’t be impacted, especially after comments made by new chairman Kevin Warsh at the conclusion of the meeting have a chance to reverberate through the economy.

All of this will be especially important for homebuyers and owners hoping to refinance their existing property. After mortgage interest rates improved by around a full percentage point in 2025, and after they were hovering below the 6% mark earlier this year, rates here increased on the back of the rising inflation rate and the war with Iran. Still, mortgage interest rates change each day, and lenders won’t have identical interpretations of market conditions. So borrowers who have been looking to secure a below-average mortgage rate may want to pay closer attention this week. But will mortgage rates actually drop after this week’s Fed meeting? That’s what we’ll examine below.

Start by seeing how low of a mortgage rate you could lock in here now.

Will mortgage rates drop after this week’s Fed meeting?

Mortgage interest rates are unlikely to drop after this week’s Fed meeting, at least not in a material way, as the central bank is positioned to take a “wait and see” approach to all of the latest economic developments. How the bank interprets a potential resolution to the war with Iran, oil prices and related inflation is key, as all three collectively can eventually cause the Fed to issue a rate cut, which it hasn’t done since December 2025. And that could subsequently lead to a marginal reduction in mortgage interest rates. But that’s not likely to happen this week as the CME Group’s FedWatch tool lists a rate cut likelihood at just over 1% as of Monday morning.

That said, borrowers may still find value in shopping around for rates and lenders now. For starters, lenders may have different responses to these ongoing developments, meaning that some will offer borrowers higher rates and some will offer them lower ones, though they won’t know which is which until they take the time to shop around. And shopping around has been shown to result in a rate around half a percentage point below average, so you may already be able to find an imperfect one that fits your budget right now. At a minimum, you’ll establish a baseline of lenders and rates to compare against so that you know which one to use when you are ready to take a purchase or refinance action.

It’s also more important than usual to consider the alternative ways to secure a below-average rate. Adding mortgage interest rate points now could prove to be helpful if it results in a significantly lower rate, even if it comes with the cost of an extra fee to the lender. Adjustable-rate mortgages (ARMs) may also be worth considering for those buyers who can lock in a lower rate now, as long as they understand that it will change in the future, at which point rates may be higher or lower than they are right now. And while a mortgage interest rate lock may not technically result in a rate that’s low right now, it can protect borrowers from any adverse conditions that cause rates to rise again before closing. That may feel like unnecessary protection until borrowers remember that rates here were around a full percentage point lower this spring. So locking in one of today’s rates with this may still make sense.

Learn more about your mortgage rate lock options here.

The bottom line

Mortgage interest rates are unlikely to drop after this week’s Fed meeting, though that trajectory can easily change with so many factors for the Fed and lenders to consider right now. And, with multiple ways for borrowers to still secure a below-average rate – even if it’s not as low as they would prefer – there’s no reason that they can’t still purchase or refinance their home now. As can be seen in recent months, if today’s rates still work for your budget and goals, even if they’re not ideal, it may still be worth taking action anyway. You can always refinance in the future when the rate climate changes all over again.