- Mortgage rates continued to fall last week, declining another 9 basis points according to the Freddie Mac Primary Mortgage Market Survey released September 18th. This is now ten weeks in a row that rates have declined, and the lowest they have been since October 2024. This has prompted many homeowners to refinance. In fact, the share of mortgage applications that were refinances reached nearly 60%, the highest since January 2022.
- Mortgage applications increased 29.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 12th. “Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October. Homeowners responded swiftly, with refinance application volume jumping almost 60 percent compared to the prior week,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Almost 60 percent of applications were for refinances, but there was also a pickup in purchase applications.” Added Fratantoni, “Even as 30-year fixed rates reached their lowest level in almost a year, more borrowers, and particularly more refinance borrowers, opted for adjustable-rate loans, with the ARM share reaching its highest level since 2008.”
- The Federal Reserve on Wednesday delivered on a widely anticipated quarter percentage point interest rate cut that will take its benchmark down to a target range of 4%-4.25%, its lowest in nearly three years. While the rate reduction was no surprise, there was plenty of intrigue over what the “dot plot” of individual members’ expectations would show for the future. The upshot: Two more cuts this year, another in 2026, and one more in 2027, all of which would take the funds rate down to around 3%, which the median forecast of the committee sees as “neutral.” Markets weren’t sure what to make of it all. At least some of the confusion may have come from Powell characterizing the rate move as a “risk management” cut. On top of that, while the FOMC indicated a rapid pace of cutting this year, with moves at the two remaining meetings in October and December, it anticipates just one reduction in each of the next two years and no cuts in 2028.
- Builder sentiment levels remained unchanged in September, but lower mortgage rates and expectations that the Federal Reserve will soon cut the federal funds rate led to higher future sale expectations in the coming months. Builder confidence in the market for newly built single-family homes was 32 in September, unchanged from the August reading, according to the National Association of Home Builders/Wells Fargo Housing Market Index released today. While builder sentiment has hovered at a relatively low reading between 32 and 34 since May, builders expressed optimism that a more favorable interest rate climate could bring hesitant buyers off the sidelines in the final quarter of 2025. “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, a home builder and developer from Lexington, N.C.
