The two-month mortgage rate rally ended, though housing analysts remain upbeat about the possibility of lower borrowing costs the rest of the year.
As of Thursday, the 30-year, fixed-rate mortgage averaged 6.30%, up from 6.26% a week earlier, according to mortgage giant Freddie Mac. The 30-year rate, by far the most popular for homebuyers, had fallen or remained unchanged each week since July 17.
The 15-year, fixed-rate mortgage also increased, to an average of 5.49% from 5.41%.
The Freddie Mac report comes a week after the Federal Reserve lowered its benchmark interest rate by a quarter percentage point and signaled the possibility of future cuts. While the Fed doesn't set mortgage rates, its decisions often affect how lenders react.
Fed Chairman Jerome Powell suggested this week that the bond market had likely factored in future rate moves, meaning that homebuyers may have already seen the immediate effect on mortgage rates.
"Investors are increasingly positioning for the Fed to pivot toward easing later this year, and that sentiment has already started to push bond yields lower," Anthony O. Kellum, CEO of Kellum Mortgage of Roseville, Michigan, said in a Bankrate.com survey. "Mortgage rates tend to follow those movements, so I anticipate a modest decline in the near term."
Thursday's increase is a mere blip, according to Ken Johnson, Walker Family Chair of Real Estate at the University of Mississippi. While it's difficult to predict mortgage rates more than a few days ahead, it appears borrowing costs will decline slowly through the end of 2025, he said.
How far?
He said 6.0% isn't out of the question.
"I would be surprised at rates lower than that," Johnson told Homes.com in an email.
Some consumers may be hesitant to enter the market and are waiting for rates to fall further and closer to the historically low levels from the pandemic. But analysts say that is unlikely anytime soon.
Mortgage applications for the week ending Sept. 19 increased 0.6% from one week earlier, according to the Mortgage Bankers Association. Refinancings inched up 1% from the previous week, when demand soared by 60%.