Lock or Wait? What to Expect from the Fed’s October Meeting

The Federal Reserve meets again on October 28–29, 2025, and if you’re house hunting, you’ve probably heard the buzz: “Wait for the Fed, rates could drop.”

It’s a tempting thought, but for most buyers, locking in your mortgage rate before the Fed meets is the safer bet. That’s because the mortgage market usually reacts before the Fed meeting, not after it.

Let’s unpack why that happens, what the September meeting taught us, and how you can use that knowledge to make a smart move this week.

How the Fed influences mortgage rates

The Fed doesn’t directly set mortgage rates. Instead, it adjusts the federal funds rate range, which influences short-term borrowing costs like credit cards and savings yields.

Mortgage rates, on the other hand, tend to follow the 10-year Treasury yield, which moves based on market expectations of where the Fed will go next.

That means mortgage lenders often price in likely Fed moves weeks before the actual meeting. So when the Fed announces a cut or a hold, it’s rarely a surprise, and markets often move the opposite direction afterward if the Fed sounds cautious about future rate cuts.

The lesson from September: Don’t wait for the Fed

In September 2025, many buyers faced this same question. The Fed was widely expected to cut rates by 0.25%, and some borrowers decided to wait, assuming mortgage rates would follow.

Here’s what actually happened:

• In early September, the average 30-year fixed mortgage rate sat around 6.35%, according to Freddie Mac’s Primary Mortgage Market Survey.
• The Fed cut rates as expected on September 17, but markets focused on Chair Jerome Powell’s cautious tone about future cuts.
• Within a week, average mortgage rates rose to about 6.6–6.7%, according to Mortgage News Daily.

That small uptick made a big difference.

Even though the Fed cut rates, the market’s reaction made mortgage rates go up, not down.

“Mortgage rates often move higher immediately after a Fed cut because investors have already priced in the move,” notes Redfin’s September 2025 housing market update.

For borrowers who waited, that meant missing the lowest rate window and paying more for the same home, a costly gamble in an already tight affordability environment.

What homebuyers should do before the October Fed meeting

With another Fed decision days away, here’s what to consider:

1. If you’re under contract or closing soon: Lock now.

Rates ahead of the October meeting already reflect expectations for a 0.25 percentage point cut. That means there’s little room for rates to fall further but plenty of room for them to rise if the Fed sounds cautious again.

Locking gives you price certainty in a volatile week.

2. Ask about a float-down option.

If your lender offers a rate lock with a float down, this can be a win-win. You lock now for security but can adjust lower if rates unexpectedly drop before closing. Most lenders require a minimum market move (often 0.25–0.50%) and limit float-downs to one use.

3. If you’re still shopping: Don’t wait too long.

If you haven’t found a home yet, it’s fine to monitor interest rates but just remember that volatility spikes around Fed announcements. Trying to “time” the perfect rate often backfires.

Lock, wait, or float-down?

The bottom line: Don’t wait for the Fed

Mortgage markets are forward-looking. By the time the Fed makes its announcement, traders have already positioned themselves for what’s expected, and any surprise can send rates higher, not lower.

For most homebuyers, that means locking before the Fed meeting is the smarter move. You’ll avoid the stress of last-minute volatility and protect your homebuying budget from market swings.

If your lender offers a rate lock with a float-down, that’s icing on the cake — you’ll be ready for both outcomes: stability if rates rise and savings if they fall.