Mortgage rates declined for the fourth consecutive week on the back of the Federal Reserve’s second rate cut of the year.
The 30-year fixed-rate mortgage averaged 6.17%, just a 0.2-percentage-point drop from last week‘s 6.19%, according to Freddie Mac’s Primary Mortgage Market survey. The 30-year rate was 6.72% a year ago.
“The last few months have brought lower rates and homebuyers are increasingly entering the market,” said Sam Khater, Freddie Mac’s chief economist.
The 15-year rate fell by a similar amount to 5.41% from 5.44% last week. The 15-year fixed-rate mortgage averaged 5.99% the same week a year ago.
While the Fed cut its benchmark rate by 25 basis points in the midst of a government shutdown, Chair Jerome Powell tempered expectations for a December cut, which the market had previously predicted. Powell’s comments caused Treasury yields to rise during the Federal Open Market Committee meeting, which may put upward pressure on mortgage rates in the next week, Kara Ng, senior economist at Zillow Home Loans, said in a statement.
Most still believe a December cut is on the way.
“The odds of a December cut have only dipped from 70% to 65%, and signs of a slowing labor market and softening inflation continue to support lower long-term borrowing costs,” One Real Mortgage CEO Samir Dedhia said in a statement.
But mortgage rates, which have notably decreased over the past few months, continued to decline, largely driven by lower 10-year treasury rates and tighter mortgage spreads. As a result, refinance activity was up 111% last week compared to the same week a year ago, the Mortgage Bankers Association’s Weekly Application Survey released on Wednesday found.
“For consumers, it’s a window of opportunity. Rates aren’t falling dramatically this week, but they’re holding near their lowest levels in nearly a year,” Dedhia said. “With more homes hitting the market and prices leveling off, the current environment presents real possibilities for both buyers and those considering a refinance. The Fed made it clear that future moves will be driven by data. So staying ready to act could pay off.”
Yuval Golan, CEO & Founder of the real estate investment financing platform Waltz, agreed, and said the timing of the cut was “especially advantageous for real estate investors looking to refinance or buy new properties at a discount during the slow season for sellers.” For example, “previously sidelined foreign real estate investors, who are less affected by the seasonality of real estate cycles, can take advantage of lower rates,” Golan said in a statement.
Ahead of this week’s rate release, investment banking firm Keefe, Bruyette & Woods did not expect the Fed’s cut to significantly push down mortgage rates. And thus, overall activity is unlikely to meaningfully increase unless mortgage rates drop more than expected, the firm said.
With a cooling labor market, mortgage rates may slowly lower through 2026, but Zillow still expects the 30-year rate to remain within the 6%-7% range as inflation and the labor market work against each other.
