M
ortgage rates have taken a significant drop in recent weeks, with the 30-year fixed-rate mortgage averaging 6.09% as of September 19. This marks a decline of over 150 basis points from earlier this year and has sparked renewed interest among home buyers. According to Sam Khater, Freddie Mac's chief economist, "Mortgage rates continued declining towards the 6% mark, reviving purchase and refinance demand for many consumers."

    The Federal Reserve's decision to cut its short-term benchmark rate on Wednesday has also contributed to the decline in mortgage rates. While these rates do not directly follow Fed moves, Khater notes that this first cut in over four years will have an impact on the housing market. "Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity."

    Mortgage applications to purchase a home jumped 5% as rates hit some of their lowest averages in about two years, according to the Mortgage Bankers Association's latest index. This surge is attributed to improving affordability conditions, driven by lower rates and slower home price growth. With more listings available – up 23% from last year – and lower mortgage rates, Lawrence Yun, chief economist at the National Association of REALTORS®, expects higher sales in the months ahead.

    Freddie Mac reports the following national averages as of September 19:

    30-year fixed-rate mortgages averaged 6.09%, down from last week's 6.2% average and significantly lower than last year's 7.19%.

    15-year fixed-rate mortgages averaged 5.15%, decreasing from last week's 5.27% average and lower than last year's 6.54%.