Will Rates Drop Again This Year? Here's What the Data Says.

This week, we locked 12 refinance loans for clients who had been waiting for the right moment — and they got it.

But one question keeps coming up:“Is it worth waiting to see if rates drop even further?”

If you're asking the same thing, you're not alone.

So we dug into the numbers — including what happened last fall, what moved rates this week, and whether it’s realistic to expect another dip in 2025.

Let’s break it down.

What Happened in Fall 2024

In September and October 2024, mortgage rates dipped briefly — giving us one of the only real rate relief windows of the year. Why?

• Inflation (CPI and PCE) was falling sharply

• Job growth was slowing

• The bond market began pricing in Fed rate cuts for 2025

  
  

Because of that setup, the 10-Year Treasury yield dropped below 4.00%, and mortgage rates followed

But that rally didn’t last. By late Q4, inflation ticked back up and the Fed put rate cuts on

It was a dip — but a short one.

What Happened This Week (and Why We Locked 12 Loans)

Fast forward to August 2025, and we just saw another short-lived dip — and many of our clients took action.

Here’s what created this week’s window:

• Softer job numbers in last Friday’s employment report

• A cooling trend in overall economic data

• Growing expectations of a Fed rate cut in September

  
  

This combination pulled the 10-Year Treasury back toward 4.00% — the same level that triggered a dip last fall. Mortgage-backed securities responded quickly, and rates improved for a few days.

That’s when we locked.

So… Will Rates Drop Again This Year?

It depends. Here’s what we’re watching now:

1. Fed Rate Cut in September

Markets already expect it — which means a cut is mostly priced in. The rate cut alone likely won’t push mortgage rates lower.

2. Inflation (CPI)

CPI came in at 2.5% in June, then 2.7% in July. If CPI holds steady or rises again, the Fed will stay cautious — and the bond market could sell off, pushing rates higher.

3. Tariff Risk

Talk of new tariffs is resurfacing. Tariffs tend to push inflation up, not down — and if inflation climbs, long-term bond yields (and mortgage rates) could increase even if the Fed cuts short-term rates.

The Smart Move Is Based on Probability — Not Hope

Could we get another dip like we saw this week?

Yes — but only if jobs weaken again and inflation drops back below 2.5%.

Will we see rates go significantly lower than they just did?

Unlikely. 

The current setup isn’t strong enough to repeat the lows we saw in October 2024 — especially with inflation creeping up and tariffs back in the news.

And if inflation worsens or tariffs increase?

Mortgage rates could head right back up.

Bottom Line

We acted fast this week because we saw the setup.We locked 12 loans during a short-lived rate dip — and those clients are now in a better financial position.

If you’ve been waiting, now is the time to get serious:

• If you’re refinancing, we need your loan documents ASAP. That way we’re ready if another short window opens (and it may only last a few days).

  
  

• If you're buying, we’ll help you set a target strike rate and lock strategically when the market gives us the chance.

  
  

There’s still potential for movement in 2025 — but it won’t be big, and it won’t last long.

Let’s get your file in position so we don’t miss it.