BUYER'S RESOURCE »

Feds Did First Rate Cut in 2025—
What It Means for Denver Homebuyers
September 18, 2025

It’s official: the Feds have done their first interest rate cut in 2025. In fact, the Feds even indicated that there could be as many as two additional cuts before the end of the year. So, what does this mean for Denver area homebuyers?
First, let’s talk about what nearly all homebuyers care most about—interest rates on mortgages. Remember, the Fed’s rate and mortgages are not directly tied together, and a Fed rate cut or multiple rate cuts does not automatically mean the mortgage rates are going to follow the same pattern. However, it is safe to say that in most cases mortgage rates do follow the same trend as the Fed’s rate. It is important to understand how and when mortgage rates will adjust due to the Fed’s rate cut.
Mortgage rate cuts often will adjust downward just with the news or likelihood of a Fed rate cut, not at the same time the Fed’s rate is cut. For example, with this week’s Fed rate cut, mortgage rates stayed relatively the same. However, at the end of last week, we saw a major drop in interest rates; this was due to the expectation that the Fed’s rate would be cut this week. With the Feds indicating we will see two additional rate cuts, we might see mortgage rates respond by dropping well before those Fed rate cuts go into effect This is important for buyers to understand.
Buyers will obviously want to take advantage of the lowest interest rates, so as a buyer, you might think waiting to purchase a home until after the next two rate cuts happen is the best option. However, we now understand that the mortgage rates might actually be the same after the final rate cuts of 2025 as they were right before the cuts. This means that waiting may not benefit you, and it might even hurt you.
Right now, rates are the lowest we’ve seen in some time; many lenders are stating rates are in the low 6s or even high 5s. As I write this Denver real estate blog, this has only been true for roughly a week. This means it’s not yet public knowledge (congrats, you’re getting the news first). Once this news becomes more mainstream and common knowledge, we might see an increase of Denver homebuyers jumping into the market to take advantage of the lower rates. This increased demand could cause inventory levels to be reduced and buying opportunities for buyers to fade. Right now, inventory levels remain higher and many buyers are able to negotiate more favorable terms when purchasing a Denver area home. By waiting, you might end up paying a higher price for a similar home and may not be able to negotiate as favorable terms when you purchase. If this is the case, any potential savings with a lower interest rate might be lost with a higher purchase price. Waiting might not only cost you more favorable purchasing terms, but also might not save you any money on a better interest rate.
Since we’ve already established that mortgage rates don’t 100% follow the Fed’s rate, we may have already seen the drop in mortgage rates that could come from the remaining two potential Fed rate cuts in 2025.This means that by waiting you may not even have the benefit of a lower interest rate. If this is the case, waiting to buy could end up costing you more with a higher purchase price and less favorable terms, with no upside.
If you’ve thought about making a Denver home purchase in 2025 but haven’t due to higher interest rates, now could be the best opportunity to get in the market. Home inventory is still high across Denver and many sellers that have been on the market for months are willing to negotiate on price and even seller concessions. Taking advantage of the new lower interest rates and motivated sellers is the perfect recipe for Denver homebuyers to lock in a lower price on their purchase, before the mainstream media gets wind of the new lower interest rates. Contact a TK Homes agent today and let’s talk about how you can take advantage of today’s market conditions to make your real estate goals a reality!
~ Written by CEO/REALTOR® Trevor Kohlhepp