(NewsNation) — Mortgage rates have fallen to their lowest level in more than a year ahead of this week’s Federal Reserve rate decision.
The average rate on a 30-year mortgage slipped to 6.19% last week, according to Freddie Mac — down from 6.27% a week earlier and near levels last seen in early October 2024. The latest weekly average is the best rate for borrowers in three years outside brief dips in fall 2024 and early 2023.
“At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Khater added: “This dynamic has kept refinancings high, accounting for more than half of all mortgage activity for the sixth consecutive week.”
The third straight weekly decline in mortgage rates comes amid market expectations that the Fed will announce another quarter-point rate cut after it meets this week. Those rates also trended lower ahead of September’s rate cut, the first of 2025.
Fed cuts rates, but that doesn’t mean mortgages will follow
Recent rate relief kept housing market activity “unseasonably resilient” in September, according to Zillow. Still, the decline in borrowing costs isn’t guaranteed to continue, even if the Fed cuts rates again.
That’s partly because anticipated rate cuts get priced into markets before they happen. After last month’s cut, mortgage rates actually ticked up for two weeks before easing.
Last fall offers another cautionary example. In September 2024, the average 30-year mortgage rate dropped to 6.09% ahead of the Fed’s cut, only to rebound to 6.84% by late November.
Realtor.com’s chief economist Danielle Hale said any further decline in mortgage rates will “depend on new developments,” noting in an email that the Fed’s upcoming decisions are “already largely priced in.”
Whatever happens with mortgage rates, the days of sub-3% borrowing are unlikely to return anytime soon. Freddie Mac data shows the average 30-year rate hasn’t fallen below 6% since early September 2022. A year earlier, in 2021, that rate averaged 2.88%.
Fed eyes rate cut despite data blackout
The Fed helps set the tone for borrowing costs, but it doesn’t directly control mortgage rates. Those rates are more closely tied to the bond market, particularly the yield on the 10-year Treasury note.
That’s why investors often pay closer attention to what Fed Chair Jerome Powell says about the economy’s direction than to the rate-cut decision itself.
Powell’s remarks could carry extra weight this time, given the ongoing data blackout caused by the government shutdown. The official September jobs report wasn’t released, forcing policymakers to rely on private sector estimates at a delicate moment for the labor market.
America saw ‘essentially no job growth’ last month, Moody’s warns
September’s inflation data was eventually released nine days behind schedule so the government could calculate the 2026 Social Security COLA. The report showed consumer prices rose 3% from a year earlier — slightly below the 3.1% increase forecasters had expected.
“With no data to convince the Fed that labor market conditions have improved in recent weeks, a rate cut appears assured,” Michael Pearce, deputy chief U.S. economist at Oxford Economics, wrote in a note Friday.
The White House has already said an October inflation report is unlikely due to the shutdown — an outcome that would further cloud an already murky path forward.
Fed policymakers are meeting Tuesday and Wednesday, after which they’re expected to announce a rate cut. Markets put the odds of a quarter-point move at 97.8% as of Monday, according to CME Group’s FedWatch tool.
