US 30-Year Mortgage Rate Falls to Two-Year Low of 6.15%

• The interest rate for the most popular U.S. home loan fell last week to its lowest level in two years, on anticipation that the Federal Reserve would start cutting interest rates on Wednesday, potentially by as much as a half of a percentage point.
• The average contract rate on a 30-year fixed-rate mortgage dropped 14 basis points in the week ended September 30^th, to 6.15%, the Mortgage Bankers Association said on Wednesday. That was the lowest rate since September 2022, and followed a 14-basis-point drop the previous week.
• Applications for home loans, refinancing, and purchases all jumped last week, the MBA said, citing lower borrowing costs and improved housing affordability as home prices rose more slowly. US mortgage rates peaked about 11 months ago at nearly 8.0% and have since fallen as the Fed signalled its 2022-2023 rate-hike campaign had ended and that its next move would be a rate cut, once policymakers became confident inflation was under control.
• On Wednesday, September 18^th, the anticipation came to pass, and the US Fed announced a 50 basis point cut as it gained 'Greater Confidence' about Inflation. Still, one school of thought is that, given that the prospect of a rate cut has already helped send mortgage rates lower, mortgage rates might not actually drop much further right now as the rate cut was already priced in. However, mortgage rates are bound to fall a little more given that policymakers have made clear they intend to continue cutting interest rates into next year.

(Source: Reuters and NPR)