When William Doolittle and his boyfriend applied for a mortgage loan in early September, the couple decided to hold off on locking in a 5.125% rate. The Federal Reserve was expected to lower its key interest rate later that month, and Doolittle and his partner hoped the cut would drive down mortgage rates even further.

The wait cost them. 

Mortgage rates have been ticking up after a steady decline in August and the first half of September, with the average 30-year mortgage sitting at roughly 6.84%, compared to 6.08% in the week ending Sept. 26, according to Freddie Mac. Doolittle said he locked down a mortgage rate for a home in Ithaca, New York, before rates jumped too high, but his attempt to time the market means he'll pay an estimated $300 more per year on his home compared to his initial offer.

Despite the higher rate, Doolittle said he and his partner are still thrilled to have found a turnkey home that checked all of their boxes: a garage for the winters, plenty of backyard space, and spare bedrooms for guests or future kids.  

"When you’re a first-time homebuyer, you feel in the woods,” Doolittle, 31, said. Mortgage rates are "really tough to predict, and we knew we were gambling a little bit ... (but) we’re still happy with the outcome.” 

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A NerdWallet survey conducted by The Harris Poll in July found 61% of Americans planned to take some sort of financial action after the Fed's rate cuts. But while the key interest rate can influence various loans, consumers are learning that timing big purchases around rate cuts isn’t always the best move.  

"I would caution consumers against putting too much stock in the promise of lower rates, or rates hitting a certain level by a certain point next year," said Elizabeth Renter, senior economist at NerdWallet. For certain purchases, "as you wait, you're risking a lot."

Why timing a mortgage loan isn't easy

The central bank cut its key interest rates twice this year, knocking it down 75 basis points to a range of 4.5%-4.75%. More cuts are predicted for 2025.

The benchmark rate has ripple effects throughout the economy. As the Fed's rate ticked up in the aftermath of the COVID-19 pandemic, so too did mortgage rates, auto loans, credit card rates and student loans.

Lowering the benchmark rate should soften those rates, too. But while financial institutions may be quick to drop rates paid on savings accounts after rate cuts, loans tend to fall at a slower clip.

And consumer loan rates are influenced by more than just the Fed, making them harder to predict.

For example, mortgage rates tend to follow the 10-year Treasury yield – the rate the federal government pays investors to borrow money from them for a decade. That yield has been on the upswing amid concerns that President-elect Donald Trump's proposed fiscal policies will be inflationary, which could mean higher mortgage rates for longer.

Mortgage rates and the Fed’s benchmark rate are “still related, but it can matter less what the Fed does today and more what markets believe that it’s going to do a year from now, five years from now, even 10 years from now,” said Daryl Fairweather, chief economist at real estate brokerage Redfin.  

Rates for home loans are also influenced by factors like location, down payment, home price and credit history.  

Despite all these variables, data shows some consumers have been trying to time major purchases with rate cuts. Data tracked by Redfin found while mortgage rates fell in August, demand didn’t spike until after the Fed rate cut announcement made headlines in September. Demand saw another boost after the election.

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People are "very responsive" to big news events like Fed rate cuts and elections, but trying to time a home purchase to rate cuts can be "a fool's errand," according to Fairweather.

“Sometimes you get lucky and you’re able to lock your rate in on a day when rates are low,” she said. “But trying to time it over the long run is really difficult, especially right now because we don’t actually expect rates to fall.” 

NerdWallet's survey found 15% of Americans planned to buy a home after rate cuts.

Collin Lambrecht, 30, of Minneapolis, and his wife started house hunting in April, looking for more space for their dog and room to grow a family. He said competition was low until September, when more buyers flooded the market after hearing news about the Fed's interest rate cuts. 

After four declined offers, Lambrecht and his wife closed on their home and locked in a 6.85% mortgage in November – up from about 6% just three weeks prior.  

“Seeing those (mortgage rate) decreases get eroded in like two or three weeks was pretty frustrating,” Lambrecht said. “If this house would have been on the market two weeks earlier, we could be paying several hundred dollars less per month.” 

Christopher Suranna, a Washington, D.C.-based realtor and president of the Greater Capital Area Association of Realtors, said he’s noticed buyers who are “definitely interest-rate conscious” in his area.

If the buyer can afford the higher-rate mortgage and finds a home that meets their standards, he suggests making the purchase and looking into refinancing at a later date. But Renter from NerdWallet warns that refinancing opportunities aren't guaranteed.

If rates are down next year, "you can refinance. But what if they're not? Or what if they are, but your creditworthiness has changed and you can't qualify for that lower rate?" Renter said. "If you got into this higher-rate mortgage and you are already stretched thin, you could find yourself in an unsustainable situation." 

Will auto loan rates go down soon?

Erin Keating, executive analyst at Cox Automotive, said the Fed's rate cuts are one reason why demand has seen a boost in recent weeks. New car sales in October were up 13% from last year, according to a recent report from Cox Automotive.

Auto loans tend to track the yield on the five-year Treasury note, and rate cuts are just starting to “trickle down” to auto loans, according to Keating. Rates at the start of November were down 30 basis points year-over-year for new vehicles and down 55 basis points for used vehicles, according to Cox Automotive.

Twenty-three percent of Americans said they planned to buy a car after rate cuts, according to NerdWallet's survey. But Keating cautioned against trying to time car purchases to rate cuts, noting that too many other factors influence costs.  

"We do believe that car interest rates are on the decline, but I don't know that it’s substantial enough where individuals should be watching the Fed rate cuts," Keating said.

Renter from NerdWallet said the longer consumers wait, the more time they allow the Fed's rate cuts to filter throughout the economy. But for now, the impact is "going to be very, very small."

"Rather than waiting on the Fed to go quarter point by quarter point, it might make more sense for you to pay more attention to the things that are within your control, like cleaning up your credit, paying down your debt, maybe amassing a larger down payment," she said.

Peter Conti-Brown, a financial regulation professor at The Wharton School of the University of Pennsylvania, advises against trying to time the market.

"Consumers are going to struggle to outsmart interest rates because the Fed doesn't know where interest rates are going," he said. "Try, to the fullest extent that you can, to ignore the news and look at your own financial planning that is independent of what is happening in the newspaper headlines."

'A new normal' for credit card rates

Despite two rate cuts, credit card loans are still hovering near their peak. Data from Bankrate shows the average credit card interest rate stands at 20.4%, down from a record 20.8% in August.

Bankrate senior industry analyst Ted Rossman called the post-rate cut dip "a drop in the bucket."

Sixteen percent of surveyed Americans planned to get a new credit card once interest rates dropped, according to NerdWallet. But Rossman said it's too early to tell if rate cuts are spurring credit card demand.

The latest Federal Reserve Senior Loan Officer Opinion Survey showed demand for credit card loans remained basically unchanged in the third quarter ending Sept. 30.

"These rate cuts take a while to pass through to credit cards. It often takes a month or two for a rate cut to be reflected," Rossman said. And with more economists expecting the Fed to slow rate cuts in 2025 over inflation concerns, "higher for longer seems like it could be the rule here."

This story was updated to change a photo.