The average interest rate on the most common U.S. home loan has fallen to its lowest level in over a year, following softer-than-expected inflation data that
strengthened expectations for another Federal Reserve rate cut.
According to the Mortgage Bankers Association (MBA), the average contract rate on a 30-year fixed mortgage dropped by 7 basis points to 6.30% in the week ending October 24, marking its lowest level since September 2024. Overall, mortgage rates have declined by more than three-quarters of a percentage point since mid-January.
Lower borrowing costs spurred more housing activity. The MBA’s weekly applications index rose 7.1% to 338.7, led by a 9.3% jump in applications to refinance existing mortgages. Applications for new home purchases climbed 4.5%.
The drop in rates comes just hours before the Federal Reserve is widely expected to deliver a second consecutive interest rate cut later on Wednesday. Markets anticipate a 25-basis-point reduction, which would bring the federal funds rate down to a range of 3.75%–4.00%. Another cut is expected at the Fed’s final meeting of 2025 in December.
The move follows a report from the Bureau of Labor Statistics last Friday, showing that September’s Consumer Price Index (CPI) rose less than analysts predicted — a rare release of data amid the ongoing federal government shutdown.
Many Fed officials now see a slowing labor market as the greater threat to the U.S. economy, with easing inflation concerns giving the central bank more room to lower rates.
Meanwhile, the 10-year U.S. Treasury yield — a key benchmark influencing mortgage costs — has fallen for four straight weeks, reaching its lowest level since early April.
