After waiting for more than two years for interest rates to be cut, homebuyers finally received some welcome news earlier this month when the Federal Reserve issued its first rate cut since 2020. Now at a range between 4.75% and 5%, the federal funds rate is far from the record lows it was at during the pandemic. 

But a cut is a step in the right direction – and mortgage interest rates have responded accordingly, falling to their lowest point since September 2022. And with additional rate cuts starting to be priced in for when the Fed meets again in November and December, today’s mortgage interest rate on a 30-year loan could soon fall again.

Now hovering just over 6%, many prospective buyers may be wondering about the potential for that rate to fall even further (and by how much). While there are ways for buyers to secure a rate below 6% now, it could fall independently this October. But how far, exactly, will mortgage rates fall next month? That’s what we’ll break down below.

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How far will mortgage interest rates fall in October?

It’s difficult, if not impossible, to predict how far mortgage interest rates will fall in October, but there are some factors to consider that can help narrow down the range. To start, there will be no Federal Reserve meeting in the month. So even though mortgage rates don’t fall precisely in tandem with the Fed, borrowers shouldn’t expect any major reductions without action there first. 

That doesn’t mean, however, that rates can’t fall. They just may not fall much lower than they already have. That said, every basis point helps, particularly over a 15-year or 30-year mortgage loan. And other, non-Fed-related developments could cause mortgage rates to decline a bit further.

Unemployment numbers for September will be released on Friday, October 4. If those numbers are problematic, it could imply further, more dramatic intervention by the Fed via interest rate cuts. So mortgage lenders may start lowering their rates in anticipation. How much they lower them by, however, is hard to predict until those numbers are public.

The next inflation report will be released less than a week later on Thursday, October 10. If that shows yet another decline, as the most recent reports have, it could empower the Fed to continue cutting rates, perhaps by a significant margin. So keep an eye out on any developments on this day and in the days that follow.

And changes to items like the 10-year Treasury yield, which mortgage rates tend to follow, could also result in changes downward, albeit those are likely to be minimal.

In short, it’s almost impossible to predict how far mortgage interest rates may fall in October, particularly with no Fed meeting on the calendar. Instead, prospective homebuyers and owners looking to refinance should monitor the market daily for opportunities to capitalize as mortgage rates can – and will – change each weekday, particularly in today’s evolving rate climate.

If you’re ready to act now, however, consider doing so. As rates decline, there’s no guarantee that the real estate market will remain the same. Cooler rates could entice more buyers to enter the market, resulting in increased competition where there currently is none (or a limited amount). That rise in buyers could also entice sellers to raise their home prices, something which could easily negate any marginal rate drops borrowers expect to see in October. So carefully weigh these scenarios against future rate drops to best determine how to proceed.

Start exploring today’s mortgage rate options online here.

The bottom line

Homebuyers looking for dramatic rate drops in October or even in the months after should manage their expectations. It’s worth remembering that it took months for rates to rise as high as they did and it can take months – if not years – for them to fall back into a comfort zone for many buyers. Still, the likelihood of mortgage interest rates returning back to the 3% range is low, so it’s worth weighing the benefits of waiting versus the advantages of acting now.