The 30-year rate remains below the 52-week average of 6.68% and ticked five basis points lower from the prior week. A drop since the beginning of August in 10-year US Treasury yields, a key indicator of where US mortgage rates are headed, helped drive that trend.
Speculation has intensified this week that the Federal Reserve could cut its own funds rate for the first time this year in September after the latest consumer price index (CPI) data showed inflation is remaining largely under control.
While a Fed cut wouldn’t directly cause mortgage rates to fall, increasing confidence in financial markets about an impending reduction spurred this week’s downturn in Treasury yields.
Fannie Mae believes the 30-year average will move slightly lower by the end of the year, and indicated in its latest projection that it expects it to hit about 6.4% by the end of 2025. By the end of 2026, that rate is forecast to slip further to 6.0%.
Rates have now fallen for four weeks in a row, and some economists believe even a moderate change in borrowing costs could help brighten prospects for a stagnant housing market.