The Fed Isn’t Your Lender: What Rate Cuts Really Mean for Buyers & Sellers

Sep 23

If you’ve been side-eyeing mortgage rates wondering if they didn’t get the memo, you’re not alone. The Fed did cut rates last week, and yet mortgage rates turned around and went up. Confusing? Absolutely. But don’t worry- I’ll break it down without the econ degree.

Fed vs. Mortgage Rates

Here’s the big misconception: the Fed Funds Rate is NOT your mortgage rate.

The Fed tweaks their rate only 8 times a year.
Mortgage rates move every single day (sometimes multiple times a day) based on the bond market.
Mortgage rates don’t sit around waiting for the Fed. They move faster, reacting to the same economic signals the Fed is also watching.

If the Fed is the tortoise, mortgage rates are the rabbit. By the time the Fed makes its move, mortgage rates have usually sprinted ahead. And that’s exactly what happened this month.

What This Means

For Buyers

Mortgage rates dropped a bit this month, but you might still feel trapped in that 2–3% mortgage from five years ago- even though your starter home is bursting at the seams. Equity is your secret weapon.

Chances are, you’ve built up serious equity since your last purchase. That opens doors. At the very least, you can make a lateral move: sell your current home, put more down on the next one, and keep your monthly payment close to what you’re paying now- without giving up the space you need- even with today’s higher rates.

And that’s just the start. You could also:

Reset Your Loan (Fannie Mae only): If your loan qualifies, you get a one-time “reset.” Drop $10K+ onto your principal, and your lender can recast your loan- lowering your monthly payment and saving multiple tens of thousands in interest. No refinance, no extra closing costs.
Rent It Out: Turn your current house into a cash-flowing rental. The San Marcos rental market is strong. If rent comes in higher than your mortgage, that income can cushion your finances and count as additional income toward your next loan.
Leverage Equity: Use that built-up equity to make a bigger down payment. A smaller loan = a smaller monthly payment.

For Sellers

The market is definitely slower than it was a few years ago. But higher rates don’t mean you’re out of luck. They mean you need strategy. Smart sellers in San Marcos are:

Pricing competitively to attract eyeballs and showings.
Offering rate buy-downs instead of just price cuts (buyers get a lower payment, and sellers keep their net proceeds).
Taking a page out of the builders’ playbook- flex cash, closing cost credits, even covering repairs or upgrades.

You don’t have to slash your price if you structure the deal so it works for both sides.

Builders are masters at this. If those shiny model homes are catching your eye, it’s probably because the sales rep dangled a fat incentive like, “We’ll cover your closing costs!” What they’re really doing is folding seller concessions into the deal so the buyer feels like they’re getting a great value and the monthly payment feels manageable- while the builder keeps their price point strong.

You can do the same thing on a resale home.

I’ve helped buyers land homes below list price and snag repairs, closing cost credits, and rate buy-downs. Meanwhile, sellers walk away happy because the net number still works. Win-win!

The Bottom Line

Don’t get stuck waiting for the “perfect” market that may never come. Real estate builds wealth when you buy the market you have, not the one you wish for.

Whether you’re moving up, relocating, or selling, there’s opportunity right now- if you run the numbers with a clear head instead of getting confused by headlines.

👉 Curious how this plays out in your situation? Let’s hop on a quick call. In 15 minutes, I can show you what steps to take so you’re ready to make your next move.