3 Fed Cuts Coming? What It Means for Mortgage Rates 2025

Twenty-five basis points isn't the story. It's what Powell said afterward that has me — and the markets — second-guessing everything the Fed just forecasted.

Here's what happened: the Fed cut rates 25 basis points and now projects three cuts for 2025, up from the 2.25 the market had priced in. When the Summary of Economic Projections came out, markets loved it — bond yields dropped, stocks bounced. Then Powell stepped to the mic and essentially admitted the labor market is in worse shape than anyone thought. The SEP says everything's fine — unemployment holding in the mid-4s, growth ticking up. But Powell said we're below the breakeven rate for hiring, and that labor demand is weakening.

The real red flag: if labor force participation increases or layoffs pick up even slightly, unemployment shoots toward 5% almost overnight — which would prove every Fed member wrong and mean these cuts came too late. He literally said, "This suggests the labor market is really cooling, and it's time to take that into account." And yet — 25 basis points. Last meeting we were at 150K jobs per month; now we're at 29K.

Powell also finally said what I've been saying for nine months: with tight monetary policy and consumers pulling back, most companies don't have the pricing power to pass tariff and inflation costs through. They're eating them, and it's showing up in earnings.

So why did the 10-year Treasury dip below 4% and then climb back during the presser? Because the bond market is calling BS — the Fed's dots say one thing, Powell's tone says another, and the market read it as "you're cutting too slow." That's why mortgage rates aren't falling as fast as headlines suggest.

The upside: key data lands in early October, and if it confirms what Powell hinted at, the Fed may signal faster cuts. For real estate, that could open a genuine window into year-end — and if you're a cash buyer, getting in before rates visibly drop and the crowd jumps back in is the move.

Thinking about buying, selling, or investing in Park City? Reach out anytime — call or text (801) 837-4445.