L
ast week the average 30‑year U.S. mortgage rate slipped to 6.19%, its lowest since Oct. 3 2024, after falling from 6.27% the previous week. A year ago the average hovered at 6.54%. The 15‑year fixed rate also eased to 5.44% from 5.52%, down from 5.71% a year earlier. These moves extend a trend that has buoyed a sluggish housing market.

    Mortgage pricing is tied to the 10‑year Treasury yield, which lenders use as a benchmark. The 10‑year has hovered just below 4% after expectations of a Fed rate cut next week pushed it to 3.99% at midday Thursday. The Fed’s policy shift last month—its first rate cut in a year—was prompted by concerns over the job market and is now expected to be followed by two more cuts this year and one in 2026.

    Despite the Fed’s easing, mortgage rates have not always trended downward. After the Fed’s first cut last fall, rates climbed above 7% in January, illustrating that short‑term policy moves do not guarantee lower mortgage costs. Nevertheless, the recent summer pullback has encouraged homeowners who locked in rates above 6% to refinance at lower rates.

    Home sales, which fell to a 30‑year low last year, have remained weak but accelerated last month to the fastest pace since February, driven by the easing rates. Mortgage applications slipped 0.3% last week, with refinance requests making up 56% of all applications—a slight uptick. Adjustable‑rate mortgages accounted for 10.8% of new applications, reflecting buyers’ search for lower initial rates.

    For refinancing to become attractive to a broader group of homeowners, rates would need to fall below 6%. Currently, about 80% of U.S. homes carry a mortgage rate under 6%, and 53% are below 4%, according to Realtor.com.

    Jake Krimmel, senior economist at Realtor.com, notes that the anticipated Fed cut is already priced in, but uncertainty over a potential December move, persistent budget deficits, and inflation expectations cap how far mortgage rates can decline. The Fed could reverse course if inflation spikes amid tariff escalations and the ongoing trade war with China.