Mortgage Rates Plunge to 11-Month Low Amid Fed Cut Bets

Lead The average rate on a 30-year fixed mortgage fell to 6.35% for the week ending September 11, marking its largest weekly drop in a year as investors priced in a Fed rate cut next week.

Nut Graf Driven by disappointing August job growth and easing Treasury yields, the decline in borrowing costs has reignited borrower interest and could offer relief to prospective homebuyers ahead of the Federal Open Market Committee meeting on September 17.

Rates at 11-Month Low

30-Year Fixed: 6.35%, down from 6.50% last week-15 basis-point drop, largest weekly decline in a year.
15-Year Fixed: 5.50%, down 10 basis points from the prior week and lowest since October 2024.
Treasury yields, which underpin mortgage pricing, slid after jobless claims rose and inflation data met forecasts, pushing the 10-year yield to its lowest level since April.

Borrower Activity Surges

Mortgage Bankers Association reports purchase applications jumped 7% week-over-week and 23% year-over-year, while refinances rose 12% week-over-week and 34% year-over-year.
“The drop in rates has generated the most robust week of borrower activity since 2022,” said Joel Kan, MBA deputy chief economist.

Fed Outlook and Market Implications

Markets assign nearly a 90% probability to a 25-basis-point Fed funds rate cut on September 17, fueling further rate declines.
Sticky August inflation suggests some Fed officials may debate the size of the cut, creating uncertainty for longer-term rate trajectories.

As rates hover near one-year lows, homebuyers and refinancers are advised to compare lender offers and consider locking in rates ahead of next week’s Fed decision to secure favorable borrowing costs.