Wed Sep 17 04:00:00 UTC 2025: **Summary:**

Mortgage rates experienced a significant drop on Tuesday due to increased investor activity in mortgage-backed bonds, anticipating an upcoming Federal Reserve rate cut. The average 30-year fixed mortgage rate fell by 12 basis points to 6.13%, the lowest since late 2022. Experts note similarities to September 2024, when rates paradoxically rose after a Fed rate cut. Some analysts believe that if the rate cut is not prompted by a recession, it may not significantly impact long-term rates. There is speculation that yields may rise again after the Fed’s announcement.

**News Article:**

**Mortgage Rates Plunge Ahead of Expected Fed Rate Cut, But Experts Warn of Potential Reversal**

**NEW YORK, NY -** Mortgage rates tumbled on Tuesday as investors flooded into mortgage-backed bonds, betting on a forthcoming interest rate cut by the Federal Reserve. The average rate for a 30-year fixed mortgage plummeted 12 basis points from Monday to 6.13%, according to Mortgage News Daily, marking the lowest level since late 2022.

Matthew Graham, chief operating officer of Mortgage News Daily, pointed out the similarities to September 2024, when rates initially dipped before surprisingly rising after a Fed rate cut. “The overall set-up is reminiscent of September 2024 when rates were doing the same thing for the same reasons ahead of Fed meeting with a virtual 100% chance of a rate cut,” Graham stated. “The same thing could happen this time, but it’s by no means guaranteed.”

Willy Walker, CEO of Walker & Dunlop, echoed caution in a video podcast for CNBC’s Property Play, highlighting historical trends. “If you go back to 1980 and the nine Fed rate cut periods over that 45-year period, the ones where the Fed cuts in a recessionary environment end up pulling down the long end of the curve,” Walker explained. He suggested that if the current anticipated rate cut isn’t due to a recession, it may not have a significant impact on long-term rates.

Walker also predicted a potential rise in yields after the Fed’s announcement. “I think you probably see the 10-year sell off a little bit after the Fed actually announces their 25 basis point cut,” he said, suggesting that investors might “buy on the rumor and sell on the news.”

While the immediate drop in mortgage rates offers a potential window of opportunity for homebuyers, experts advise caution and warn that the trend may not last, particularly depending on the economic context surrounding the Fed’s decision.

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