Mortgage Interest Rates Today: Mortgage Rates Dip to 6.26% Following Long-Awaited Fed Cut

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Mortgage rates decreased again on Thursday, reaching a new 11-month low, a day after the Federal Reserve lowered its benchmark interest rate for the first time in nine months, as was widely expected.

The average rate on 30-year fixed home loans was 6.26% for the week ending Sept. 18, down from 6.35% the previous week, according to Freddie Mac. Rates averaged 6.09% during the same period in 2024.

“Mortgage rates decreased yet again this week, prompting many homeowners to refinance,” says Sam Khater, Freddie Mac’s chief economist. “In fact, the share of mortgage applications that were refinances reached nearly 60%, the highest since January 2022.”

The latest drop in mortgage rates came after the Federal Open Market Committee (FOMC) voted 11-1 to lower the central bank’s overnight rate by a quarter percentage point to a range of 4% to 4.25%—the first move since December 2024.

The sole dissenting vote was cast by Stephen Miran, President Donald Trump‘s economic adviser and newly appointed member of the Fed’s Board of Governors, who called for a more robust half-point rate reduction.

While Trump has long been advocating for a sharper rate cut, arguing that it was needed to reinvigorate the sluggish housing market, the overwhelming majority of the Fed’s policymakers opted for a more measured approach, citing heightened economic uncertainty.

“Tariffs pose a wildcard risk to inflation, and downside risks to employment appear to be increasing,” says Realtor.com® Senior Economist Jiayi Xu, referring to the disappointing August jobs report.

Notably, a quarter-point cut was widely anticipated and already largely priced into mortgage rates, which have been edging down for the past several weeks.

Looking ahead, the Fed’s September projections largely align with market expectations through 2025, with two more quarter-point cuts anticipated this year.

Beyond that, markets expect the federal funds rate to reach 3% by the middle of 2026, while Fed participants see policy remaining slightly above 3% through 2028.

“This divergence could place upward pressure on mortgage rates, but for now, borrowers are benefiting as the 30-year mortgage rate has slipped below 6.5%,” says Xu.

The economist predicts that with the rates finally easing into the low 6% range, the housing market should see a modest uptick in home sales in the coming months.

However, Xu says the broader impact will remain limited, with 81% of homeowners still holding mortgages below 6%, giving them little reason to sell or move at this time.

The good news is that homeowners who purchased at early highs will now be seeing opportunities to refinance at a lower rate, offering them some affordability relief.

“At the same time, household real estate wealth has reached record levels, with elevated equity providing a meaningful cushion for both consumers and the wider economy,” adds Xu.

How mortgage rates are calculated

Mortgage rates are determined by a delicate calculus that factors in the state of the economy and an individual’s financial health. They are most closely linked to the 10-year Treasury bond yield, which reflects broader market trends, like economic growth and inflation expectations. Lenders reference this benchmark before adding their own margin to cover operational costs, risks, and profit.

When the economy flashes warning signs of rising inflation, Treasury yields typically increase, prompting mortgage rates to go up. Conversely, signs of falling inflation or weakness in the labor market usually send Treasury yields lower, causing mortgage rates fall.

The mortgage rates you’re offered by a lender, however, go beyond these benchmarks and take some of your personal factors into account.

Your lender will closely scrutinize your financial health—including your credit score, loan amount, property type, size of down payment, and loan term—to determine your risk. Those with stronger financial profiles are deemed as lower risk and typically receive lower rates, while borrowers perceived as higher risk get higher rates.

How your credit score affects your mortgage

Your credit score plays a role when you apply for a mortgage. A credit score will determine whether you qualify for a mortgage and the interest rate you’ll receive. The higher the credit score, the lower the interest rate you’ll qualify for.

The credit score you need will vary depending on the type of loan. A score of 620 is a “fair” rating. However, people applying for a Federal Housing Administration loan might be able to get approved with a credit score of 500, which is considered a low score.

Homebuyers with credit scores of 740 or higher are typically considered to be in very good standing and can usually qualify for better rates.

Different types of mortgage loan programs have their own minimum credit score requirements. Some lenders have stricter criteria when evaluating whether to approve a loan. They want to make sure you’re able to pay back the loan.