Mortgage Interest Rates Forecast

Mortgage rates this week

Mortgage rates fell modestly in the week ending Sept. 19, as lenders prepared for the Fed’s decision to cut interest rates.

• The 30-year fixed-rate mortgage averaged 5.89% APR, down 15 basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

• The 15-year fixed-rate mortgage averaged 5.08% APR, down nine basis points from the previous week's average.

• The 5-year adjustable-rate mortgage averaged 7.48% APR, approximately the same as the previous week's average.

Mortgage shoppers might have hoped that APRs would plummet following the Fed’s decision to cut the federal funds rate by 50 basis points. However, weekly mortgage rates have been falling steadily since the end of August. The weekly 30-year rate has dropped by double-digits for three out of the past four weeks. Rates will likely continue on this downward trajectory, but since lenders have already factored the expected rate cut into customers’ rate offers, a dramatic drop is not expected.

» MORE: How the Fed affects mortgage rates

September mortgage rate forecast

Mortgage rates have fallen four months in a row, and they'll probably extend the streak by going down in September too. There are two related reasons: Inflation is subsiding, and the Federal Reserve is about to reduce short-term interest rates.

A combination of falling inflation and rising unemployment has pushed mortgage rates lower and convinced the Federal Reserve that it should cut short-term interest rates sooner rather than later to prevent too many job losses.

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