Mortgage rates slide to near three-year lows ahead of Fed meeting

Mortgage rates slide to near three-year lows ahead of Fed meeting

U.S. mortgage rates fell sharply this week as markets braced for the Federal Reserve’s policy announcement, with many lenders’ 30-year fixed offers dipping to levels not seen since late 2022 — roughly a three-year low, according to mortgage market trackers. The move helped nudge buyer demand higher and eased some pressure on would-be homeowners still coping with persistently elevated borrowing costs.

The benchmark 30-year fixed mortgage, which peaked above 7% earlier this year, dropped in recent days: Freddie Mac reported the 30-year average fell 15 basis points in the week ending Sept. 11 to about 6.35%, the largest weekly decline in a year and a welcome relief for prospective buyers. The downward trend continued into mid-September, with Bankrate’s daily survey showing a roughly similar 30-year average of about 6.32% on Sept. 15. 

Analysts and mortgage-market commentators tied the slide to traders’ overwhelming expectation that the Fed will begin trimming its policy rate at the Sept. 16–17 meeting. A Reuters poll earlier this month found markets had largely priced in a first cut, and that expectation has softened Treasury yields and boosted mortgage-backed securities — the immediate drivers of consumer mortgage pricing. 

How much consumers feel the relief depends on lenders’ pricing and local market conditions. Freddie Mac’s weekly note also pointed to brighter purchase activity — mortgage applications for home purchases rose as rates eased — but cautioned that the market remains sensitive to any shifts in Treasury yields or Fed messaging. 

Mortgage specialists warned that while the recent drop is meaningful, it does not guarantee a sustained return to the ultra-low rates seen earlier in the decade. Mortgage pricing is set in the secondary market and can swing quickly as traders reprice risk around inflation data, Fed guidance and the supply of mortgage-backed securities. CBS MoneyWatch and other outlets have advised borrowers who see a rate that fits their budget to consider locking it, because day-to-day moves can be volatile. 

For lenders and investors, the near-term outlook hinges on Fed communications at the meeting and the path of longer-term Treasury yields. If the Fed signals a gradual sequence of cuts, market technicians say mortgage spreads could tighten further; if the central bank emphasizes caution, gains in mortgage markets could ebb. Either way, the sudden easing ahead of the Fed session underscored how closely the housing finance world watches central-bank actions for any change in monetary policy.