A downward trending line graph labeled "Mortgage Rates" hitting a clear low point, with a Federal Reserve building icon in the background and a downward arrow symbol superimposed.
Mortgage Rates Hit 13-Month Low as Federal Reserve Signals Further Cuts
As of late October 2025, U.S. mortgage rates have declined to their lowest levels in over a year. The average rate for a 30-year fixed mortgage has dropped to 6.17%, down from 6.27% the previous week, marking the lowest point since October 2024. Similarly, the 15-year fixed mortgage rate has decreased to 5.41%.
Market Response to Rate Declines
This downward trend follows a lower-than-expected inflation report, reinforcing expectations of another interest rate cut by the Federal Reserve. The Mortgage Bankers Association (MBA) reported a significant rise in mortgage activity for the week ending October 24, with overall applications increasing by 7.1%. Refinancing applications surged by 9.3%, while home purchase mortgage applications grew by 4.5%.
Housing Market Dynamics
Despite the decline in mortgage rates, pending home sales remained flat in September, indicating that economic uncertainty and job market concerns may be deterring buyers. The National Association of Realtors reported no change in contract signings following a revised 4.2% increase in August.
In the housing market, U.S. single-family home prices rose by 0.4% month-over-month in August, with an annual increase of 2.3% through August. Affordability remains a challenge due to sustained price levels and economic uncertainties.
Federal Reserve Policy Outlook
The Federal Reserve is expected to reduce its key interest rate, marking the second cut this year, and may signal another cut in December to support hiring amid economic uncertainty. While the 30-year mortgage rate has already declined from 6.6% to 6.2% following signals from Fed Chair Jerome Powell, the broader U.S. economy faces mixed signals: hiring has nearly halted, inflation remains high, and growth relies heavily on tech investment in AI infrastructure.
Investment Impact
In response to these developments, mortgage-related exchange-traded funds (ETFs) have shown slight increases. For instance:
- VanEck Mortgage REIT Income ETF (MORT): $10.35, up 0.24%
- iShares Mortgage Real Estate ETF (REM): $21.86, up 0.21%
- Vanguard Real Estate Index Fund ETF (VNQ): $89.18, up 0.25%
- October 29: Key US mortgage rate drops to 13-month low, industry group says
- October 30: Average long-term US mortgage rate dips to 6.17%, its lowest level in more than a year
- October 27: Federal Reserve likely to cut key rate Wednesday and may signal another cut to follow
Key Developments
The prompt for this was: mortgage rates news
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