Mortgage rates have dropped significantly this week, with a 15 basis point decrease in the average 30-year fixed rate. Buyers are taking notice, with the highest year-over-year growth in purchase loan applications in over four years, according to Freddie Mac.

Freddie Mac reports that as of September 11, 30-year fixed-rate mortgages are averaging 6.35%, up from last year’s average of 6.20%. Rates on both 30-year and 15-year fixed-rate mortgages are currently below previous highs, but recent decreases indicate a possible further dip in rates.

The Federal Reserve’s decision to keep the federal funds rate steady during the most recent meeting suggests that mortgage rates will likely remain stable in the near future. While mortgage rates aren’t directly tied to the fed funds rate, they often follow similar trends, meaning an increase in the fed funds rate could lead to higher mortgage rates.

The upcoming Fed meeting on September 16 and 17 is not expected to result in a cut to the fed funds rate. However, anticipation of such a cut often leads to lower mortgage rates in the weeks leading up to the meeting.

While interest rates on 10-year Treasury notes have increased, the current housing market is facing high demand and limited supply, leading to rising home prices. Speculation of a recession could drive more buyers to secure lower rates, further increasing demand for homes.

Prospective buyers hoping for lower mortgage rates may need to consider buying a home sooner rather than later. With high demand and limited supply, waiting for rates to drop significantly may not be a viable strategy in the current housing market.

To make homeownership more affordable in today’s market, buyers can explore options like interest rate buydowns or considering homes in areas with lower prices but longer commutes. Understanding the relationship between mortgage rates and economic factors can help buyers make informed decisions.

Future predictions suggest that mortgage rates will remain above 6% throughout 2025 and 2026. While rates have decreased gradually, they are not expected to drop significantly in the near future, making it important for buyers to act based on current market conditions.

Read more at Yahoo Finance: When will mortgage rates go down? They’re edging down now, and buyers are noticing.