The interest rate on the most popular U.S. home loan dropped last week to a 13-month low after a key reading of inflation came in lower than expected, cementing expectations for another Federal Reserve interest-rate cut.
The Mortgage Bankers Association said on Wednesday the contract rate on a 30-year, fixed-rate mortgage dropped 7 basis points to 6.30% in the week ended October 24, the lowest since late September 2024. With the latest drop, mortgage rates have fallen more than three-quarters of a percentage point since mid-January.
The MBA's weekly applications index rose 7.1% last week to 338.7, led by a 9.3% increase in applications to refinance existing loans. Applications for loans to purchase a property rose 4.5%.
The report comes hours ahead of what is expected to be a second consecutive interest rate cut by the Fed later on Wednesday. The U.S. central bank is expected to lower its benchmark rate by 25 basis points to a range of 3.75% to 4.00%, and another such reduction is expected at its final meeting of the year in December.
Last Friday, in a rare release of official economic data amid a federal government shutdown, the Bureau of Labor Statistics reported the Consumer Price Index for September rose less than expected.
A majority of Fed policymakers have become convinced that softness in the job market is the greater risk to the economy, and the report was seen as easing the lingering concerns among those still worried about inflation and greasing the wheels for rate cuts.
The yield on the 10-year U.S. Treasury note, the government security most influential to mortgage rates, has declined for four weeks in a row and is near its lowest since early April.
