Weekly Mortgage Rates Fall As a September Rate Cut Seems Likely

The latest data shows that fixed mortgage rates have dropped for the second consecutive week amidst speculation of a rate cut in September.

The 30-year fixed-rate mortgage averaged 6.66% in the week ending Aug. 14, down four basis points from the previous week. Meanwhile, the average 15-year fixed-rate mortgage decreased by seven basis points to 5.72%. This trend is influenced by market expectations of a 25 basis point rate cut by the Federal Reserve next month.

July’s Consumer Price Index (CPI) rose 2.7% on an annual basis, slightly below economists’ forecast of 2.8%. Despite the rise in inflation, market analysts are optimistic about a rate cut in September, as inflation is growing at a slower pace than anticipated. The prevailing expectation is for the Federal Reserve to lower rates next month by 25 basis points.

While the Federal Reserve does not directly control mortgage rates, its decisions impact them by influencing the interest rate that banks use to borrow from each other. A rate cut by the Fed makes it cheaper for lenders to offer mortgages, potentially leading to lower mortgage rates for consumers.

Despite the pressure for immediate rate cuts, the Fed has been cautious due to concerns about inflation. However, the slower-than-expected inflation growth provides the Fed with more leeway to lower rates. Lenders are already factoring in the expectation of a rate cut, which could lead to easing of mortgage rates before the Fed’s meeting in September.

The latest data indicates a 0.2% increase in shelter costs in July, putting pressure on renters. Core CPI, which excludes food and energy costs, rose by 0.3% month-over-month and 3.1% year-over-year, reflecting the fastest price growth in five months. This suggests that consumers are experiencing the impact of tariffs, with prices expected to rise further following recent tariff hikes.

These rising costs are particularly challenging for home shoppers, especially first-time buyers who are facing higher rents, increasing shopping expenses, and a lack of equity for a home purchase.

Recent data from the National Association of Realtors (NAR) reveals that 75% of metro markets witnessed an increase in home prices in the second quarter of 2025. The national median price for a single-family existing home reached a record-high of $429,400, with median prices in the Northeast and West regions exceeding half a million dollars.

While the rising home prices may seem concerning, the data actually indicates a more favorable trend for buyers. Price hikes are less common compared to the first quarter of the year, during which 83% of metro areas saw price growth. Additionally, double-digit price growth was more prevalent in the first quarter than in the second quarter.

NAR’s chief economist, Lawrence Yun, suggests that borrowers in the South and West regions are likely to benefit the most from a potential rate cut in September. States with substantial job growth, such as Idaho, Utah, the Carolinas, Florida, and Texas, could see a surge in housing demand if interest rates decline.

If you are considering buying or refinancing a home next month with the expectation of lower mortgage rates, it’s advisable to prepare in advance. Ensure your financial profile is in good shape and apply for preapproval from lenders before diving into the market. This proactive approach can help you secure the best interest rates and stand out as a serious buyer in a competitive market.