There’s one group of Americans already benefiting from the Fed’s coming rate cut decision: current homeowners.
Americans are jumping on the opportunity to refinance their home loans, with refinance applications rising 58% in the last week, according to data from the Mortgage Bankers Association. Refinance applications were up 70% compared to levels during the same week last year.
Demand was even stronger for those seeking adjustable-rate mortgages, where borrowing costs fluctuate and are tied to short-term interest rates in the economy. The share of refinancing activity tied to ARMS rose to 12.9% in the last week, the highest share recorded since 2008, the group said.
The surge in demand has largely been fueled by a sharp drop in home borrowing costs as the market anticipates the Fed to trim its target rate at its September policy meeting. That directly impacts short-term borrowing costs in the economy, but it’s also influencing long-term rates as investors expect borrowing costs to ease over a longer time frame.
The 10-year US Treasury eased to around 4.02% on Wednesday, down from its peak around 4.8% in early 2025. Mortgage rates are tied to the 10-year yield.
Meanwhile, the 30-year fixed mortgage rate dropped 15 basis points to around 6.35% in the last week, according to Freddie Mac data. That represented the largest weekly drop in a year, the mortgage finance firm said.
The 5/1-year adjustable mortgage rate, a borrowing plan where mortgage rates are fixed for the first five years and adjust each year afterwards, also cooled to 5.7% in the week ending September 5, the MBA said in a previous report.
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Mortgage activity is on the rise broadly, with total applications up 9.2% in the week ending September 5.
Federal Reserve cuts key rate by quarter-point and signals more to come
