Mortgage Rates Drop to 11-Month Low

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News Flash

Mortgage Rates Hit an 11-Month Low

Mortgage rates dropped to around 6.5% for 30-year fixed loans – the lowest we've seen since late 2023.

The reason? Markets are betting heavily on a Fed rate cut at the mid-September meeting. We're talking 83% to 94% probability that they'll slice rates by 25 basis points.

Recent inflation data has been softening, and the Fed's been dropping some pretty clear hints about easing their tight-fisted approach to monetary policy.

But remember, Fed cuts don't automatically equal massive mortgage relief.

Historical data shows mortgage rates march to their own drummer. Bond market yields, long-term inflation expectations, and investor sentiment all play major roles in where your buyers' rates actually land.

So while rate cuts generally improve borrowing conditions, don't expect dramatic overnight changes in affordability.

The current opportunity is real, though.

This dip to 6.5% gives buyers and refinancers their best shot in months. The market has already priced in the expected Fed move, creating a sweet spot where rates have improved without getting ahead of themselves.

But affordability? That's still the elephant in the room.

New homes have shrunk to their smallest average size in 20 years as builders try to keep prices reasonable in this environment. Even with better rates, buyers are getting less house for their money.

What to watch next: Labor market reports are coming up, and they'll heavily influence the Fed's September decision. Strong job numbers could pump the brakes on rate cuts. Weak data could accelerate them.

Sources: [Source], [Source], [Source]

More You Should Know

• GDP Up, CRE Investment Down: Despite a strong 3.3% GDP growth in Q2 2025 boosting retail, industrial, and potentially office sectors, a decline in private investment casts a shadow on future commercial real estate demand. [Source]

• Buyer Leverage Grows in Housing: The U.S. housing market is rebalancing, with increasing inventory and slowing price growth empowering buyers after the pandemic boom. [Source]

• Appraisal Scrutiny Hits Private Lenders: Reports of inflated appraisals in Baltimore have led some private mortgage lenders to scale back originations, prompting the industry to develop watchlists and red flag reports to identify risky appraisers, title firms, and borrowers amidst sector growth and mounting risks. [Source]

• Pittsburgh Remains Most Affordable: Pittsburgh has been named the most affordable housing market for the fifth consecutive year, despite all 95 major housing markets surveyed by the Demographia International Housing Affordability report now falling into "unaffordable" categories. [Source]

• Mortgage Rates to Dip: Experts predict a modest decline in 30-year fixed mortgage rates between September and October 2025, driven by anticipated Federal Reserve rate cuts, with Q3 rates projected to settle around 6.698%. [Source]

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