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MORTGAGE RATES
Here’s Why Mortgage Rates Won’t Fall After the Fed Cut
In case you’ve been waiting for that
Mortgage rates have been coming down fast. The average rate on a 30-year loan is 6.31 percent, according to Bankrate’s national survey of lender. That’s the lowest level since early 2023, and way below the 8 percent mark rates hit last October.
The next question is how low can mortgage rates go? The Federal Reserve is poised to cut rates at its Sept. 18 meeting — but it seems as if the mortgage market already has priced that cut into its rates.
“I think a lot of people are looking at the September Fed meeting thinking that there’s going to be a big stair step down in rates,” says Jerimiah Taylor, chief real estate officer at Movoto, a real estate search site. “The reality is that it’s already priced in. You’re getting disproportionate movement in mortgage rates, which means the market is already starting to price in Fed cuts.”
Here’s an illustration of the point: In October 2023, 30-year mortgage rates peaked at 8.01 percent. As of Sept. 11, that number is down to 6.31 percent — a decline of 1.7 percentage points even though the Fed has left its benchmark federal funds rate untouched during that time.
