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After waiting for more than two years for interest rates to drop, homebuyers finally received some good news earlier this month when the Federal Reserve released its first report. drop in rates since 2020. Now between 4.75% and 5%, the federal funds rate is far from the historic lows it was at during the pandemic.
But a reduction is a step in the right direction – and mortgage interest rates responded accordingly, falling to their lowest point since September 2022. And as additional rate cuts begin to be priced in at the next Fed meeting in November and December, the current mortgage interest rate on a 30-year loan could soon fall again.
Now sitting at just over 6%, many potential buyers may be wondering if that rate could drop even further (and by how much). Although there are ways for buyers to get a rate below 6% nowit could fall independently in October. But exactly how far will mortgage rates fall next month? This is what we will detail below.
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How far will mortgage interest rates fall in October?
It’s difficult, if not impossible, to predict how much mortgage interest rates will fall in October, but there are some factors to consider that can help narrow that range. To begin with, there will be no Federal Reserve meeting in the month. So even if mortgage rates don’t fall at exactly the same pace as the Fed, borrowers shouldn’t expect major reductions without first action.
This does not mean, however, that rates cannot fall. They may not fall much lower than they already have. That said, every basis point helps, especially with a 15- or 30-year mortgage. And others, non-Fed related developments could lead to a further drop in mortgage rates.
Unemployment figures for September will be released on Friday October 4. If these numbers are problematic, it could mean bigger, more drastic intervention from the Fed via interest rate cuts. Mortgage lenders could therefore start lowering their rates in anticipation. However, it is difficult to predict how much they will lower them until these figures are public.
The next inflation report will be released less than a week later, on Thursday October 10. If it shows a further decline, as the most recent reports have doneThis could allow the Fed to continue cutting rates, perhaps to a significant extent. So keep an eye on everything that happens that day and in the days that follow.
And changes to things like the 10-year Treasury yield, which mortgage rates tend to follow, could also lead to downward changes, although those will likely be small.
In short, it’s almost impossible to predict how far mortgage interest rates could fall in October, especially since there are no Fed meetings scheduled. Instead, potential buyers and homeowners looking to refinance should monitor the market daily opportunities to capitalize, as mortgage rates can – and will – change every day of the week, especially in today’s changing rate environment.
If you’re ready to act now, consider doing so. As rates fall, there is no guarantee that the real estate market will stay the same. Lower rates could encourage more buyers to enter the market, leading to increased competition where there currently is none (or a limited amount). This increase in the number of buyers could also encourage sellers to increase their price. house priceswhich could easily wipe out any drop in marginal rates borrowers expect to see in October. These scenarios should therefore be carefully weighed against future rate cuts to determine how best to proceed.
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The essentials
Homebuyers looking for dramatic rate cuts in October or even the months after should manage their expectations. It’s worth remembering that it took months for rates to rise as high as they did and it may take months or even years for them to fall back into a comfort zone for many buyers. However, the probability of mortgage interest rates return to 3% the scope is small, so it’s worth weighing the benefits of waiting versus the benefits of acting now.
