How do mortgages look with the rate cut?

The Federal Reserve (Fed) announced a move that has been anticipated since 2020: Reducing interest rates by 0.5% (i.e., making them between 4.75-5%). The reduction is the first rate cut in more than four years.

With this move, many expected a stark and immediate reduction in mortgage rates. However, this did not occur. The Fed rates do not directly influence mortgage interest rates as they do on savings accounts, personal loans or auto loans. Mortgages are expected to go down but not immediately. This is because mortgages are long-term financial products with a duration of 15, 20 or 30 years.

Rocket Mortgage points out that "the Federal Reserve oversees monetary policy, which means it indirectly influences mortgage rates."

Rates have experienced dips and rises

According to figures provided by Zillow, mortgage rates have experienced changes, in some cases declines or in other cases increases, since the Fed made its announcement:

- The 30-year fixed mortgage rate rose 2 basis points from 5.63% to 5.65%.

- The 15-year fixed rate was down 7 basis points from the previous week's average rate of 5.69%.

- The current 5-year ARM rate is up 10 basis points from 6.10% to 6.20%.

In addition, multiple factors influence mortgage rates. It is possible that mortgage lenders will be cautious about sharply reducing their rates, thus avoiding a sudden surge in mortgage applications.

The current cost per rate

On average nationwide, and according to Zillow, today's mortgage rates stand at:

- 30-year fixed: 5.65%.

- 20-year fixed: 5.33%.

- 15-year fixed: 4.93%.

- 5/1 ARM: 6.20%.

- 7/1 ARM: 5.95%.

- 30-year VA: 5.19%.

- 15-year VA: 4.97%.

[This data may change due to daily fluctuations / Last updated Sept. 19, 11 a.m. ET].