Mortgage Rates Fall to 6.09 After Fed's Interest Rate Cut

Mortgage rates have taken a significant dip, falling to 6.09% after the Federal Reserve's interest rate cut. This change is a welcome relief for homebuyers and refinancers.

The 0.25 percentage point reduction in the federal funds target rate is the first cut since 2008. This move is expected to have a ripple effect on the mortgage market.

As a result of the rate cut, borrowers can expect to save money on their monthly mortgage payments. For example, a borrower with a $200,000 mortgage at 6.09% can save around $30 per month compared to a rate of 6.34%.

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Mortgage rates have fallen to 6.09% for the week ended September 19, according to Freddie Mac. This represents a 0.11 percentage point decline from a week earlier and a 1.1 percentage point drop from a year ago.

Some mortgage professionals are predicting rates could drop even lower in the next few months. Debbie Calixto, sales manager at loanDepot, forecasts that the typical mortgage could drop into the mid-5% range by year end.

The average rate on a 30-year fixed-rate loan has dropped significantly, making it a great time for prospective home buyers to consider purchasing a home. Mortgage rates have been closely watched this week after the Federal Reserve's announcement on Wednesday that it's cutting its short-term benchmark rate.

Mortgage applications to purchase a home jumped 5% as mortgage rates hit some of their lowest averages in about two years, according to the Mortgage Bankers Association's latest index. This indicates that home buyers are seeing improving affordability conditions, sparked by lower rates and slower home price growth.

Here are the national averages for mortgage rates as of September 19:

Low mortgage rates are a big deal for home buyers, and right now, rates are at a relatively low point. The average 30-year fixed-rate mortgage has fallen to 6.09%, which is a 0.11 percentage point decline from last week and a 1.1 percentage point drop from a year ago.

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This drop in rates is expected to motivate home buyers to make a purchase. According to Freddie Mac's chief economist, Sam Khater, mortgage rates have been declining towards the 6% mark, reviving purchase and refinance demand for many consumers.

Some mortgage professionals are even predicting that rates could drop even lower in the next few months. Debbie Calixto, sales manager at loanDepot, forecasts that the typical mortgage could drop into the mid-5% range by year end.

Lower mortgage rates are making homes more affordable for buyers. Mortgage applications to purchase a home jumped 5% as mortgage rates hit some of their lowest averages in about two years, according to the Mortgage Bankers Association's latest index.

More listings are also available, up 23% from a year ago, which could open up more opportunities for home buyers and lead to higher sales in the months ahead. Here are the current national averages for mortgage rates as of September 19:

These rates are significantly lower than they were last year, when the 30-year rate averaged 7.19% and the 15-year rate averaged 6.54%.