Mortgage Interest Rates Forecast

Mortgage rates ticked lower this week, with the average 30-year fixed falling to 6.25% APR, according to rates provided to NerdWallet by Zillow.

That’s a modest dip, but it comes as uncertainty grows around the job market. Roughly 750,000 federal workers are furloughed during the government shutdown, and with the Labor Department’s jobs report on hold, lenders are turning to other clues. Reports from ADP and Bank of America Institute suggest hiring has slowed and unemployment claims are rising — signs the economy may be losing steam.

That murky outlook could keep some downward pressure on mortgage rates, which is welcome news for borrowers. Homeowners with rates around 6.75% or higher might find it worth exploring a refinance, especially if they can lower their rate by half a point or more. But with the shutdown limiting clear economic data, it’s hard to know how long this softer rate environment will last.

» MORE: Is it a good time to buy a house? Here's what to consider.

October Mortgage Rates Forecast

Financial markets seem confident that the Federal Reserve will reduce the federal funds rate at the end of its scheduled Oct. 28-29 meeting. On Oct. 9, the markets were registering close to a 95% chance of a rate cut, according to the CME FedWatch.

Mortgage rates are likely to slip lower as investors gain confidence that the Fed will reduce short-term rates once or twice before the end of the year. However, those cuts are not yet a sure thing.