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Mortgage rates just fell again. Here’s what you need to know.

The 30-year fixed-mortgage rate is at its lowest since spring 2023, amid rising expectations that the Federal Reserve will trim interest rates.

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(Washington Post illustration; iStock)
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Mortgage rates fell on Thursday to their lowest level since April 2023 — 6.2 percent for a 30-year fixed-rate mortgage, down from 6.35 percent a week before, according to Freddie Mac.

That’s a sharp drop from the high of 7.8 percent recorded last October and welcome news for would-be home buyers who have been priced out of the property market, as well as homeowners who bought at high rates and are eager to refinance. It also comes as the Federal Reserve gets ready for its next policy meeting next week, when it is expected to announce the first interest-rate cut since it began hiking rates in March 2022 to combat spiraling inflation.

Here’s what you need to know about where mortgage rates are heading.

Why are mortgage rates falling?

The Fed’s anti-inflation campaign pushed its benchmark rate from just above zero to over 5 percent, where it has stayed since summer 2023. While high rates ultimately tamed inflation, they also made borrowing much more expensive, from car loans to mortgages.

The Fed has emphasized that it will keep rates high until inflation is contained — and recent data is pointing that way. The consumer price index in August clocked in at 2.5 percent — the lowest level in more than three years and a sizable drop from the 2.9 percent increase in July. After striking a more cautious note following several hotter-than-expected inflation readings early this year, Federal Reserve Chair Jerome H. Powell finally signaled in late August that a rate cut would be coming at the September meeting.

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