Weekly Mortgage Rates Fall As a September Rate Cut Seems Likely

Fixed mortgage rates fell for the second week in a row as markets bet on a September rate cut.

The 30-year fixed-rate mortgage averaged 6.66% in the week ending Aug. 14, down four basis points from the previous week. The average 15-year fixed-rate mortgage fell seven basis points to 5.72%. A basis point is one one-hundredth of a percentage point.

Cooler-than-expected inflation boosts hopes for rate cut

July's Consumer Price Index (CPI) rose 2.7% on an annual basis, slightly below the forecast among economists of 2.8%. While growing inflation should theoretically make the Federal Reserve less likely to cut rates in September, market analysts are buoyed by inflation accelerating slower than previously feared. Fed watchers are currently voicing almost unanimous consensus that central bankers will lower rates by 25 basis points next month.

While the Federal Reserve doesn't set mortgage rates, it does influence them by setting the interest rate that banks pay to borrow from one another. If that rate gets reduced, it makes it less expensive for lenders to generate mortgages, and they can pass those savings onto customers in the form of lower mortgage rates.

Despite pressures to cut rates immediately, the Fed has resisted because lower interest rates can contribute to inflation. If inflation isn't growing as fast as previously thought, then this risk is offset somewhat, giving central bankers more license to lower rates.

Mortgage shoppers should bear in mind that lenders anticipate what the Fed will do ahead of time and bake these expectations into rate offers. That means that if market sentiment continues in favor of an upcoming rate cut, we'll see mortgage rates ease before the September 17 meeting announcement, not after.

What the CPI reveals about home shopper struggles

Shelter costs rose 0.2% in July, increasing pressure on renters. Core CPI — which removes food and energy costs — also jumped 0.3% month-over-month and 3.1% year-over-year, signalling the fastest price acceleration in five months. This indicates that consumers were feeling the effects of tariffs in July, with prices set to potentially increase more this month following last week's far-reaching tariff hikes.

All of this puts financial strain on home shoppers, particularly those looking to become first-time buyers. These folks face the compounding struggles of higher rents, growing shopping bills and no equity to put towards a home purchase.

Home prices rising, but less than at the start of 2025

New data from the National Association of Realtors (NAR) released earlier this week showed that 75% of metro markets saw rising home prices in the second quarter of 2025. The national median price for a single-family existing home reached a record-high $429,400, and median prices in both the Northeast and West regions are well over half a million dollars.

This may sound alarming to home shoppers. But the data is actually trending in a more friendly direction for buyers: price increases are less common than in the first quarter of this year, which saw 83% of metro areas experiencing price growth. Additionally, more than twice as many metro areas saw double-digit price growth in Q1 compared to Q2.

According to NAR chief economist Lawrence Yun, borrowers in the South and West are the most likely to benefit from a September rate cut. "If interest rates decline, the strongest release of pent-up housing demand is likely to occur in states with significant job growth in recent years, such as Idaho, Utah, the Carolinas, Florida, and Texas."

If modestly lower mortgage rates will allow you to buy or refinance next month, there are things you can do now to prepare. Get your financial profile in shape, and apply for preapproval with lenders before you start shopping. This will help you get the best interest rate, and can make you stand out as a serious buyer if competition rises as rates fall.

More From NerdWalletCompare Current Mortgage RatesNerdWallet Mortgage CalculatorMortgage Refinance Calculator: Should I Refinance?

Taylor Getler writes for NerdWallet. Email: tgetler@nerdwallet.com.

The article Weekly Mortgage Rates Fall As a September Rate Cut Seems Likely originally appeared on NerdWallet.