What the Fed’s September Rate Cut Could Mean for Mortgage Rates & San Antonio Real Estate in Q4 2025

Question: The Federal Reserve just cut its benchmark interest rate in September — how will that affect mortgage rates heading into Q4 2025, and what might it mean for San Antonio’s housing market?

Short answer: The Fed’s 0.25 % cut is a modest but significant signal toward easing. Mortgage rates are likely to drift lower, though they won’t collapse — and in San Antonio, that shift can help reignite buyer interest, give sellers more flexibility, and inject momentum into a market that’s felt stalled.

What the Fed actually did — and why it matters

On September 17, 2025, the Federal Open Market Committee lowered the target range for the federal funds rate by 25 basis points, setting it at 4.00 % to 4.25 %. (Federal Reserve) The Fed characterized the move as a “risk management cut”: not a reaction to crisis, but a proactive step in light of slowing labor growth and inflation that remains above target. (National Association of Home Builders)

Notably, the Fed also pledged to continue reducing holdings of Treasuries and mortgage-backed securities, signaling it remains cautious in its balance sheet strategy. (Federal Reserve)

The cut was widely anticipated and is broadly consistent with market expectations. In fact, much of the market had already “priced in” this move ahead of the announcement. (National Association of Home Builders)

Why does all that matter for mortgage rates? Because while the Fed doesn’t directly set mortgage rates, its policy—together with bond market expectations—shapes the environment under which mortgage rates trade.

Projected path for mortgage rates in Q4 2025

What we’re already seeing

• Mortgage rates have begun to respond: the average 30-year fixed rate recently dipped to 6.35 %, marking an 11-month low. (MySA)
• Some bond market yields (especially the 10-year Treasury, which mortgages tend to loosely track) have softened, reflecting investor expectations that the Fed may continue easing. (National Association of Home Builders)
• Analysts and housing experts caution, however, that much of the benefit of the cut is already priced in, so future downward moves may be incremental. (MySA)

Forecasts & likely ranges

Here’s what various forecasters expect for 30-year mortgage rates in Q4 2025:

Most projections cluster in the 6.30 % – 6.50 % zone for Q4, with a possible soft slide lower if inflation and growth soften further. (The Mortgage Reports)

To be clear: a single Fed rate cut is unlikely to yank mortgage rates down dramatically. Instead, any further declines will depend heavily on inflation trajectory, growth data, and how credibly the markets believe the Fed will follow through with more cuts. (National Association of Home Builders)

What this means for San Antonio’s real estate market

1. Favoring cautious buyers

Until now, high mortgage rates have kept many would-be buyers on the sidelines, especially first‑time buyers or those stretching budgets. Even a modest drop of 10–20 basis points can shift a deal from unviable to viable. (Texas Real Estate Research Center)

In San Antonio, where affordability edges already play a role, easing rates can unlock demand from buyers who were waiting for a break. (MySA)

2. More negotiation room for sellers

With buyer traffic likely to increase modestly, sellers may feel less pressure to slash prices immediately. But because inventory has been rising, many sellers are already discounting or reducing expectations. (MySA)

This environment sets the stage for more realistic negotiations: sellers may need to be flexible on terms (e.g. closing costs, repairs, timing) to attract buyers.

3. Builders may accelerate

The Fed’s rate cut helps reduce borrowing costs not just for homebuyers but also for builders, especially those relying on acquisition, development, and construction (AD&C) financing. (National Association of Home Builders)

In San Antonio, where peripheral growth and new subdivisions continue pushing the city’s footprint outward, any uptick in builder confidence can boost new inventory—helping relieve pressure on home prices in the mid to long term.

4. Local market cadence might tighten

Historically slow seasons (fall/winter) could see more activity than in recent years. As mortgage rates dip and buyer urgency edges up, homes may spend fewer days on market than they are today.

However:

• If inflation or macro surprises re-energize bond yields, rates could rebound.
• Inventory levels are already elevated, so price gains may remain modest, especially in lower-demand segments.
• Buyers and sellers who assume continued rapid declines may be disappointed if the Fed’s pacing is slower than markets expect.

In short: San Antonio isn’t poised for a boom, but a gentle thaw—a market where movement resumes and participants who’ve been waiting get another chance.

The September rate cut by the Fed is a meaningful—but not seismic—shift. Mortgage rates are likely to drift lower, potentially settling in the low‑6 percent range in Q4 if inflation and growth metrics cooperate. In San Antonio, that translates into renewed buyer interest, more negotiation flexibility, and a chance for the market to re-engage after months of stagnation.

If you're contemplating buying, selling, or refinancing in the coming months, it’s more important than ever to pay attention to your personal financing profile (credit, down payment, timing) and not just macro forecasts.

Ready to explore your options?
Reach out to Mark Stillings for insights tailored to your specific situation — whether you're aiming to buy, sell, or refinance. Let’s map the best move forward in this evolving rate environment.