This week, favorable housing costs are becoming more evident as average mortgage rates continue to decline, following a significant half-point interest rate cut announced by the Federal Reserve on Wednesday.
According to the latest Primary Mortgage Market Survey® (PMMS®) released by Freddie Mac, the average 30-year fixed-rate mortgage (FRM) stands at 6.09%, a decrease from last week’s figure of 6.20%. This time last year, the average was 7.19%.
Here are the current averages:
The 30-year FRM averaged 6.09% as of September 19, 2024, down from 6.20% the previous week. The 15-year FRM also saw a decrease, averaging 5.15%, down from last week’s 5.27%. A year ago, the 15-year FRM averaged 6.54%.
Experts are weighing in on these changes:
“Mortgage rates are heading toward the 6% mark, sparking renewed interest in both purchasing and refinancing for many consumers,” stated Sam Khater, Freddie Mac’s chief economist. He noted that while mortgage rates do not directly correspond to Federal Reserve actions, this rate cut—the first in over four years—is likely to have an impact on the housing sector. He added that the declining rates seen in recent weeks suggest that the market had already anticipated this cut, but further decreases may stimulate additional housing activity.
Realtor.com Senior Economist Ralph McLaughlin highlighted that the market’s expectations have shifted dramatically over the past month. He stated, “Chairman Powell has made it clear that the Federal Open Market Committee (FOMC) believes the fight against inflation is over, and their main concern will be maintaining a robust labor market. After disappointing job reports in July and August, there are expectations that the Fed may implement another significant cut by year-end to address concerns about a weakening labor market.”
Regarding the future of mortgage rates, McLaughlin expressed uncertainty, noting that since the recent 50 basis point cut has already been accounted for by the markets, significant further reductions might be limited. He anticipates rates will likely hover between 6% and 6.2% for the remainder of the year, potentially dipping into the high 5% range by next spring.