Following a slew of interest rate cuts, the Federal Reserve kept rates steady at its last Federal Open Market Committee meeting on Jan. 28, with a range remaining between 3.5% and 3.75%.
The CME Fedwatch tool also shows that, as of Feb. 12, there is a 94% chance the Fed will keep rates steady at its March meeting.
Still, rates have declined over the past year, affecting high-yield savings accounts and CDs, which in turn affects homeowners and buyers saving for down payments, renovations, or emergency funds.
“Homeowners and buyers were probably counting on those higher rates to meet their goals (or at least help their savings keep up with increasing costs). Lower rates make that harder,” says Facundo Abraham, CFP, advice and planning research analyst at Edward Jones.
Still, there are options savers can explore to get the best returns.
What a declining high-yield savings and CD environment could mean for homeowners and buyers
Steve Sexton, CEO of Sexton Advisory Group, explains that savers have been “in a bit of a golden window” over the past few years where money socked away could earn a meaningful yield without taking on market risk.
As that window begins to narrow, he says that homeowners and buyers should shift their mindset from maximizing return to protecting their purchasing power and timeline certainty.
“If you’re saving for a home purchase, renovation, or a housing-related emergency fund within the next one to three years, this is likely not the right time to stretch for yield. A half-percent difference in interest is insignificant compared to the risk of needing money during a market downturn,” Sexton says.
These declining rates really signal the importance of a disciplined savings plan, he notes.
“Focus less on trying to ‘win’ the rate game and more on ensuring the money will be there exactly when you need it. Housing decisions are emotional enough—your savings shouldn’t add another layer of stress,” he says.
Abraham adds that a declining high-yield savings and CD environment could mean savers might need to adjust their plans, whether that’s saving more, delaying home purchases or improvements, or settling for a less expensive home or a smaller renovation.
“To put this in context, the cost of remodeling a home increased about 3.5% to 4% in 2025, according to Verisk,” he explains. “So a savings rate of about 4% as we’re seeing right now barely helps keep up with inflation.”
Are there any banks still offering 5% returns on any kind of savings account?
Abraham says that you’ll be hard-pressed to find banks offering a 5% rate, and, in fact, not many banks are even offering rates above 4% these days.
“Unfortunately, since we anticipate the Fed to continue the rate-cutting cycle in 2026, we don’t think we’ll see savings rates back to 5% anytime soon,” Abraham says.
At the time of writing, only one bank is offering a 5% APY on its savings products. Varo, a neobank offering accounts strictly online, has a 5% account available. There is a 0% opening deposit; however, it comes with the expectation that you’ll direct deposit a minimum of $1,000 a month to keep the rate.
And that’s where experts flag these accounts with higher rates—they often come with several limitations.
“What consumers need to realize is that savings rates are variable. A bank offering 5% today can adjust that rate tomorrow if the interest-rate environment shifts. Instead of jumping from bank to bank for a temporary boost, I recommend evaluating the full relationship—FDIC insurance, customer service, ease of transfers, and whether the offerings fit into your broader financial plan,” Abraham says.
Where should buyers safely store short-term housing savings?
Experts agree: Liquidity and access are key factors for short-term housing savings.
As Jacob Sadler, CFP, founder and senior adviser at Curio Wealth, puts it: “Short-term housing money has a job, it needs to be there, liquid, and without risk when the closing date or contractor invoice arrives.”
Because of that, Sadler typically favors high-yield savings accounts, money market funds, or short CDs that mature before the funds are needed.
“The priority is liquidity and principal stability, safety wins over yield,” he says.
Sexton echoes the sentiment, noting that real estate timelines can change quickly: You might find the right home sooner than expected, or a renovation opportunity could require quick access to capital.
“Locking all your funds into long-term CDs could create unnecessary stress, which is why I don’t normally recommend this as a savings vehicle for short-term housing savings,” he says. The goal isn’t to chase returns, it’s to eliminate surprises.
“In that sense, the money you’ve set aside for a down payment on a home does not belong in stocks or anything with meaningful volatility. If the market drops 15% right when you’re ready to close, you’ll be in a pretty tough spot,” he says.
Now, for buyers with a longer timeline, short-term CDs might be worth considering.
Eric Croak, CFP, accredited wealth management adviser, and president of Croak Capital, says that three-month CDs could work, but once again stresses that buyers need to be 100% sure they won’t need access to the funds before then.
“Anything beyond six months, I would say, no. Assuming somebody’s needing that housing money, you could be in a bad spot. I think some investors might be making a mistake here by tying up funds for too long,” Croak says.
What are the savings risks for buyers in this environment?
Buyers might get spooked by declining rates and shrinking yields, prompting some to take on more risk in hopes of better returns.
Curio Wealth’s Sadler says that, in this environment, many people make the mistake of focusing on yield rather than safety.
“In the search for higher yields, savers take on more risk and introduce the possibility where they are forced to sell during a dip because their timeline didn’t cooperate,” he says. “If market movement would change the home decision, the money probably shouldn’t be in the market.”
Bobbi Rebell, CFP, consumer finance expert at CardRates.com, also underscores the fact that we can’t control interest rate cycles. In turn, what consumers should focus on is protecting their purchasing power and ensuring they have funds available when the right property or renovation opportunity arises, she says.
“Emergency funds are for saving; yield is secondary to safety,” she says.
There is one silver lining, however: Lower interest rates translate into lower mortgage rates, and lower rates for things like a home equity line of credit (HELOC) to finance a renovation, she notes.
“The financial environment is never going to be perfect. It’s better to focus on making the best decisions for your personal goals and avoiding the anxiety tied to things we can’t control,” she says.
Finally, Sadler says that, in the end, savers need to ask themselves if the “juice is worth the squeeze,” if shopping and bank hopping are worth the additional yield on the amount of cash they have.
“As a general rule of thumb, a 1% difference on balances under $100,000 may be worth pursuing, and a 0.5% to 1% spread between banks may be worth the work for balances above $100,000,” he says. “And, while it should go without saying, go and check the rates on your existing accounts, because you may find that they are not what you think.”