Freddie Mac: Mortgage rates fall nearly a full point lower than early 2025
Sam Khater, Freddie Mac’s chief economist, said that, “At the start of 2025, the 30-year fixed-rate mortgage surpassed 7%, while today it hovers nearly a full percentage point lower,” as quoted by CNN.
The decline comes as home prices soften in many major metro areas, prompting sidelined buyers to consider entering the market again, as per the report.
Mortgage rate decline stands out amid government shutdown
The sharp one-week drop stands out, especially as the ongoing federal government shutdown has limited the release of most economic data, as reported by CNN. Freddie Mac, still under federal conservatorship, continues to publish its weekly mortgage survey despite the shutdown, as per the report.
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Mortgage rates expected to stay within the 6%–7% range
Economists expect the trend may continue. Kara Ng, senior economist at Zillow Home Loans, noted that markets see an October rate cut by the Federal Reserve as “near certain,” as quoted by CNN. She added, Ng said, “With signs of softer economic momentum and a deteriorating labor market, mortgage rates may drift slightly lower through 2026,” and added that, “Still, Zillow expects the 30-year fixed rate to remain confined within the 6%–7% range observed in recent years,” as quoted by CNN.While the Fed doesn’t directly set mortgage rates, its actions can influence them through the 10-year Treasury yield, which affects borrowing costs, as per the report.ALSO READ: Coca-Cola recall hits Texas: FDA issues warning on these products due to contamination – check if your soda can is affected
Falling mortgage rates improve home affordability for buyers
Lower rates, combined with softer home prices, are improving affordability for many Americans, as per the CNN report. According to Redfin, the typical home sold in September for 1.4% below asking, the largest September discount since 2019, reported CNN.
Buyers are starting to take advantage. Sales of existing homes in September rose at the fastest pace in seven months, according to the National Association of Realtors, as per the report.
Lawrence Yun, NAR’s chief economist, said that, “As anticipated, falling mortgage rates are lifting home sales,” and added that, “Improving housing affordability is also contributing to the increase in sales,” as quoted by CNN.
FAQs
What is the current average mortgage rate in the US?
The average 30-year fixed mortgage rate is 6.19%, according to Freddie Mac.
Why did mortgage rates drop this week?
Rates fell due to expectations of a Federal Reserve rate cut and signs of a cooling economy.
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