October Mortgage Outlook: Lower Rates Could Deliver a Treat

"Presented with the humility of someone who doesn't always get these predictions right, here's why mortgage rates might fall in October. But first, how else will mortgage shoppers be affected? In past government shutdowns, most mortgages have been available, including those backed by the Federal Housing Administration (FHA loans) and the Department of Veterans Affairs (VA loans). There were delays in some cases. USDA loans, backed by the Department of Agriculture, were unavailable."

"A Fed rate cut is almost a sure thing Financial markets seem sure that the Federal Reserve will reduce the federal funds rate at the end of its scheduled Oct. 28-29 meeting. On the morning of Oct. 1, the markets were registering a 100% chance of a rate cut, according to the CME FedWatch. Mortgage rates are likely to slip lower as investors gain confidence that the Fed will reduce short-term rates once or twice before the end of the year."

"Fed officials, including Chair Jerome Powell and Vice Chair for Supervision Michelle Bowman, have said in recent speeches that the central bank's rate policy isn't on a preset course. The Fed released an economic forecast on Sept. 17, the day it cut the federal funds rate by a quarter of a percentage point. In that forecast, 12 Fed officials predicted one or two rate cuts this year, and seven predicted no more rate cuts. The central bank is undecided about what to do next."

Mortgage rates are likely to fall in October as markets expect the Federal Reserve to reduce the federal funds rate. Financial markets were registering a 100% chance of a rate cut for the Oct. 28–29 meeting according to CME FedWatch. Mortgage rates are likely to slip lower as investors gain confidence that the Fed will reduce short-term rates once or twice before year-end. Fed officials have said policy is not on a preset course and the central bank's economic forecast showed disagreement among officials about further cuts. Past government shutdowns left most mortgages available, though USDA loans were unavailable and some delays occurred.

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