The average 30-year fixed rate mortgage was 6.16% yesterday, a decrease of 0.03% since the day before. The 15-year fixed mortgage rate stood at 5.19%, the same as one the day before. The 30-year FHA mortgage averaged 5.44% yesterday, having dropped by 0.1. Meanwhile, the 30-year jumbo mortgage rate was 6.64%, reflecting an increase of 0.01%.
The bigger picture
With the hours counting down to the Federal Reserve unveiling its nearly inevitable rate cut at 2 p.m. Eastern, the CME FedWatch tool puts the chances of a quarter-point reduction at 96.1%. That sized cut has long been priced into mortgage rates, so there's no need for those to move if it comes in as expected.
However, if a half-point cut is announced, that could send mortgage rates tumbling. Conversely, no cut would likely push them sharply higher.
We share everyone else's opinion that a quarter-point cut is almost certain, and we will be shocked if anything else is delivered.
The dot plot is key
What could severely affect mortgage rates today are two things also due this afternoon:
- The Fed's summary of economic projections, which includes its famous "dot plot," due at the same time as the rate announcement. This shows where each member of the rate-setting committee expects the Fed rate to be at the end of 2025, 2026 and over the longer term.
- A 2:30 p.m. Eastern, a news conference hosted by Fed Chair Jerome Powell.
Both these events will lay out the Fed's thinking on future rate cuts. And that's at least as important to markets as today's cut.
In the last summary of economic projections, the consensus dot plot was for one more cut this year after today. Markets will be happy, and mortgage rates might fall, if the new plot suggests two more cuts in 2025 (Oct. 29 and Dec. 10) with yet more in 2026.
However, there's no guarantee today's dot plot will show that. The committee is divided.
Some members want to head off falling employment through further cuts. However, others want to hold rates steady in case early signs of an inflation spike turn out to be accurate predictors of prices.
Political complications
There's no compelling case for rate cuts at this time. True, employment is a bit shaky, but yesterday's retail sales figures suggest the economy is a long way from a recession. Meanwhile, annual inflation continues to run considerably hotter than the Fed's target rate of 2%.
"Ordinarily, you wouldn’t be looking for rate cuts here,” James Egelhof, chief U.S. economist at BNP Paribas, told MarketWatch yesterday.
"But the political risk [of holding rates steady] is simply infeasible,” Egelhof continued. "We think the Fed is trying to minimize conflict with [politicians]. That means the Fed will deliver a reasonably predictable series of rate cuts over the next few months."
This threat to the Fed's independence is viewed with alarm by many investors. And, combined with a ballooning deficit and uncertainty over tariffs, it has been an important driver behind the 41% spike in gold prices so far this year, according to MarketWatch.
For now, markets seem content to go along with Fed rate cuts. But some worry that they're storing up trouble in the future.
Mortgage Rate Trends: Past 90 Days
Purchase Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.16% | 6.19% | -0.03% | -0.35% |
| 15-Year Fixed | 5.19% | 5.24% | +-0% | -0.3% |
| 30-Year Fixed FHA | 5.44% | 6.66% | -0.1% | -0.38% |
| 30-Year Fixed VA | 5.55% | 5.7% | -0.02% | -0.36% |
| 30-Year Fixed USDA | 5.44% | 5.58% | -0.02% | -0.34% |
| 30-Year Fixed Jumbo | 6.64% | 6.66% | +0.01% | -0.05% |
| 5/6 Year ARM | 6.31% | 6.34% | -0.03% | -0.26% |
Refinance Rates
| Loan Type | Rate | APR | Daily Change | Monthly Change |
|---|---|---|---|---|
| 30-Year Fixed | 6.25% | 6.27% | -0.04% | -0.33% |
| 15-Year Fixed | 5.2% | 5.24% | +-0% | -0.3% |
| 30-Year Fixed FHA | 5.39% | 6.61% | -0.11% | -0.39% |
| 30-Year Fixed VA | 5.58% | 5.71% | -0.03% | -0.37% |
| 5/6 Year ARM | 6.4% | 6.42% | +0.05% | -0.17% |
What's coming up?
Although economic reports are usually the main drivers of changes to mortgage rates, they're not the only ones. The general mood in markets and economically consequential news can also affect those rates. News items concerning tariffs and deficit funding are especially influential at the moment.
Here's what economists from Comerica Bank are expecting from this week's reports:
"Comerica forecasts for the FOMC to cut the fed funds target rate by a quarter percent to a range of 4.00% to 4.25% at its next decision
Wednesday. The Fed will publish an updated Dot Plot, with their forecasts of growth, inflation, the unemployment rate, and the most
appropriate course for rates. If Chair Powell repeats the cautious guidance from his speech at Jackson Hole in August, markets could
abruptly reprice their aggressive pre-meeting rate cut expectations. Retail sales probably grew slower in August on lower vehicle sales after a robust increase in July. Core retail sales, which exclude sales at dealerships and gasoline stations, are expected to rise solidly. Housing
starts probably eased in August following sharp increases in July, while issuance of building permits likely picked up after a big decline
in July. Industrial production likely held steady in August, as mining (especially oil and gas extraction) and utilities output weighed on the
index."
Mortgage rates today
Besides this afternoon's Fed activities, the MarketWatch economic calendar shows two economic reports scheduled for release today:
- August housing starts — Markets expect an annualized rate of 1.37 million, down from July's 1.43 million
- August building permits — Markets expect an annualized rate of 1.37 million, up from July's 1.35 million
For most reports, a higher-than-expected number tends to push mortgage rates upward, while a lower-than-expected one might drag them downward. As-forecast figures may leave those rates virtually unchanged.
However, today's reports rarely affect mortgage rates. Indeed, none of the remaining reports on this week's calendar typically has an impact on those rates.
