Mortgage Rates Slip Ahead of Fed Rate Cut Decision

Mortgage rates across the U.S. fell on Wednesday, with the average 30-year fixed mortgage dropping to 6.24% as investors priced in an imminent Federal Reserve rate cut. Shorter-term and adjustable rates also edged lower, offering temporary relief to homebuyers.

The slide in borrowing costs arrives on the eve of the Fed’s first policy rate cut of 2025, underscoring how bond markets and inflation data are already influencing mortgage yields. As the central bank prepares to trim its benchmark rate, homebuyers and refinance seekers are seizing the chance to lock in improved financing terms.

Key Rate Movements

• 30-Year Fixed: 6.24% (down from 6.46%)
• 15-Year Fixed: 5.47% (down from 5.66%)
• 5/1 Adjustable-Rate Mortgage: 5.50% (down from 5.59%)

Markets Brace for Fed Cut

Bond traders are now assigning nearly 100% odds to a 25-basis-point Fed cut Thursday afternoon. Weak August jobs data and stickier-than-expected inflation readings have tilted market expectations toward looser monetary policy, driving the 10-year Treasury yield-and, by extension, mortgage rates-lower.

What Borrowers Should Know

• Lock Now: Buyers under contract benefit from rate certainty; even small drops can save hundreds on monthly payments.
• Refinancers’ Window: Homeowners considering refinancing may find today’s rates the most attractive of 2025, though gains beyond this week could be limited.
• Equity Impact: Lower rates may spur purchase activity, but existing homeowners with lower-rate loans are likely to stay put, keeping supply constrained.

Outlook After the Fed Meeting

If the Fed indeed cuts rates, mortgage yields could dip further, but the magnitude and duration of any decline will depend on post-meeting guidance, inflation trends and housing demand. Borrowers are advised to monitor announcements closely and consult lenders for personalized quotes.