US Mortgage Rates Fall Near 3-Year Lows

The Federal Reserve is holding a meeting on Sept. 17 with interest rate cuts expected.

A "For Sale" sign in Washington, on May 19, 2025. Madalina Vasiliu/The Epoch Times

The 30-year fixed-rate mortgage rate dropped to 6.13 percent on Tuesday from 6.25 percent on Monday, hovering around three-year lows, according to Sept. 16 data from Mortgage Daily News.

Rates have previously been near the 6 percent level a few times since September 2022. During this period, the lowest level of 5.99 percent was hit in February 2023, and the highest, 8.03 percent, was hit in October 2023.

“The 30-year fixed-rate mortgage fell 15 basis points from last week, the largest weekly drop in the past year,” said Sam Khater, chief economist at Freddie Mac.

“Mortgage rates are headed in the right direction and homebuyers have noticed, as purchase applications reached the highest year-over-year growth rate in more than four years.”

The dip in rates comes as the Federal Reserve is holding its second-day meeting on Sept. 17. The Fed has kept interest rates in a range of 4.25 to 4.5 percent since December last year and has withheld from cutting since then.

According to data from the CME FedWatch tool, the majority of interest rate traders are anticipating a 25-point rate cut.

The Fed’s benchmark interest rate is one of the factors that affect mortgage rates. Hence, any substantial reduction in Fed rates could translate into lower mortgage rates, thereby boosting demand in the housing market.

In a Sept. 11 commentary, Lisa Sturtevant, chief economist at real estate data company Bright MLS, said that the declining mortgage rates were a “welcome sign” as the country enters the fall homebuying period.

However, the decline would not have any impact on affordability as home prices have continued to increase, she said.

In March, when rates were at 6.65 percent, the median price of an existing home was $403,100, indicating a monthly payment of $2,854, said the economist.

“Fast forward to today, the average rate on a 30-year fixed rate mortgage is 6.35 percent. Assuming home prices are flat year-over-year (i.e. that home prices stop climbing), the median sold price in September is estimated at $414,200. The median monthly payment, therefore, would be $2,854,” Sturtevant wrote.

“For real affordability gains, we need to see both a drop in mortgage rates and much slower price growth, or even home price declines.

“However, the drop below 6.5 percent could have an important psychological effect. Buyers who are not strictly priced out of the market could be enticed this fall as they see rates drop below the 6.5 percent threshold.”

Builder Sentiment, Buyer Entry

Meanwhile, builder sentiment remained steady in September and expectations turned more optimistic, the National Association of Home Builders (NAHB) said in a Sept. 16 statement.

Confidence among builders in the market for newly built single-family homes remained at the 32 level this month, unchanged from August. Expectations of sales in the coming months climbed as builders forecast the Fed to cut its benchmark interest rates, said the association.

“While builders continue to contend with rising construction costs, a recent drop in mortgage interest rates over the past month should help spur housing demand,” said NAHB Chairman Buddy Hughes.

NAHB Chief Economist Robert Dietz highlighted that the 30-year fixed-rate mortgage average has declined 23 basis points over the past four weeks.

“This is the lowest level since mid-October of last year and a positive sign for future housing demand,” he said.

However, in a Sept. 11 statement, real estate brokerage Redfin said that while lower mortgage rates have shaved off hundreds of dollars from monthly payments, prospective buyers are still cautious when it comes to buying properties.

“There’s not a flood of buyers now that mortgage rates are coming down, but I am seeing a trickle as some house hunters do the math and realize rates have dropped enough to fit a monthly payment into their budget,” said Kristin Sanchez, a Redfin Premier agent from Nashville, Tennessee.

“A lot of house hunters are waiting because they think mortgage rates will drop more when the Fed cuts interest rates in September. I’m trying to advise buyers that’s unlikely to happen, and that now is a good time to lock in a rate.”