Mortgage Rates Dip as Fed Cut Looms

Lead: Average U.S. 30-year fixed mortgage rates fell to 6.27% today amid growing market bets on a Federal Reserve rate cut next week, marking the lowest level since last October.

Nut Graf: Homebuyers and refinancers have seized on easing borrowing costs after softer inflation and labor data strengthened expectations that the Fed will trim its federal funds rate at the Sept. 16-17 meeting, driving down yields on long-term loans.

Rates Slide to Multi-Month Low

• 30-year conventional loans: 6.268%, down 21 basis points from one week ago and 5 basis points from yesterday.
• 30-year FHA loans: 6.115%, the lowest since last October.
• 30-year VA loans: 5.847%, offering the steepest savings among conforming products.

Fed Cut Anticipation Fuels Demand

Investors have priced in a quarter-point Fed funds rate reduction, currently targeted at 4.25%-4.50%, following a 2.9% annual inflation print for August and signs of a cooling jobs market, reinforcing expectations of easier monetary policy.

Impact on Buyers and Refinancers

• Purchase applications have ticked up as rate-sensitive buyers reenter the market.
• Refinance volumes are projected to surge, with many homeowners locking rates before any further downward movement.

What’s Next

Markets will look to Fed Chair Jerome Powell’s post-meeting press conference for guidance on the pace and size of future cuts. Continued declines in 10-year Treasury yields could further undercut mortgage costs, though any upside surprises in inflation or employment data may temper rate relief.