Mortgage Rates Near 6% After Fed Meets

Mortgage rates are hovering just above 6% following the Fed’s historic rate cut, and borrowers can expect more cooling through the year.

Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.09%, down from 6.20% the week prior. 

A year ago at this time, the 30-year fixed-rate mortgage averaged 7.19%.

15-year loans also saw a significant drop, falling to 5.15% from 5.27%. A year ago at this time, they were at 6.54%.

The Federal Open Market Committee on Wednesday voted to make its first cut in the federal funds rate in more than four years, a substantial 50-basis point slash which lowers the target range for the key rate from its previous level of 5.25% to 5.5% down to 4.75% to 5%.

“While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market,” said Sam Khater, Freddie Mac’s Chief Economist.

“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.”

Analysts have warned that borrowers shouldn’t expect an immediate, drastic dip.

“I expect the 30-year fixed mortgage rate will be closing in on 6% by the end of the year and settle in near 5.5% by the end of 2025,” Moody’s chief economist Mark Zandi told ResiClub. 

“The decline in mortgage rates is due to a narrowing in the spread with the 10-year Treasury yield as the Fed eases policy, the yield curve becomes normally sloped and bond volatility declines, and pre-payment risk normalizes.”