Ethan P. from Raleigh, NC asks: Hi Mitch, I’ve noticed that mortgage rates have been coming down recently. Do you think the housing market could finally be turning a corner? And if so, could that help boost the economy more broadly?
Mitch’s Response:
To put recent moves in the 30-year fixed mortgage rate in perspective, readers can consult the chart below. As you mentioned in your question, the average 30-year fixed mortgage has fallen to 6.35%, its lowest level since last October. That’s down from above 7% earlier this year, and it gives buyers a bit more purchasing power.1
30-year Fixed Mortgage Rate
Housing Market Shifts: How to Position Your Portfolio
Mortgage rates are easing, and many are asking if the housing market is turning a corner. For investors, shifts like this often ripple through markets in ways that create opportunity.
I recommend all of our readers download our free guide, Using Market Volatility to Your Advantage, to see how market changes, like housing shifts and policy moves, can create openings for investors. Inside, you’ll learn:
- How market volatility can “shake up” complacent investors
- Potential bargains that may be uncovered through turbulence
- Why volatility may help prevent overheating and market “bubbles”
- What history shows us about opportunities for steady investors in turbulent markets
- Plus, more ways you may be able to benefit from a volatile market
If you have $500,000 or more to invest, download your copy today!
Download Our Guide, “Using Market Volatility to Your Advantage”3
But as seen on the chart, the move is not that big, and still puts the 30-year fixed mortgage rate well within historical norms. Even still, the decline has already sparked some activity—mortgage purchase applications are up over 20% from a year ago. But this activity does not change the affordability issue in the housing market. Home prices have risen more than 50% since 2019, and higher property taxes and insurance costs continue to weigh on budgets. The reality is that even with lower rates, the market is still far from “cheap.”
I think we need to see rates fall below 6% before we really see a pop.
Your question posits whether the Fed’s actions may get us there. As a point of clarification, I think the Fed’s expected rate cuts have contributed to downward pressure on mortgage rates, but it’s important to note that the Fed doesn’t directly set these rates. The Fed controls short-term, overnight lending rates. Mortgage rates, on the other hand, tend to track longer-term bond yields, especially the 10-year Treasury, which moves based on inflation expectations, government deficits, and overall demand for U.S. debt. If tariffs or rising federal borrowing keep inflation expectations elevated, long-term rates may stay higher, limiting how far mortgage rates can fall even as the Fed eases.
Lower mortgage rates are also a double-edged sword. They can stimulate demand, but that demand can push home prices higher, especially in markets where supply is still tight. And while refinancing activity could pick up for homeowners who bought in the last few years, most homeowners remain locked into much lower rates from the 2020–2021 period, so the boost there may be modest.
As for whether a turnaround in housing could lift the broader economy, it’s worth keeping perspective. Housing contributes about 15–18% to GDP, but most of that is “housing services” (like rents and utilities) that don’t fluctuate much. The more cyclical piece, residential investment, including construction, remodeling, and broker fees, usually accounts for just 3–5% of GDP. That means housing can provide a tailwind at the margins, but it isn’t typically the driver of economic cycles in the U.S.
So yes, lower mortgage rates could spark a modest pickup in housing activity, and that would be welcome after several years of sluggish sales. But housing alone is unlikely to be a game-changer for the economy.
Housing may offer a lift, but it won’t steer the economy on its own. For investors, the real opportunity lies in preparing for the broader market shifts ahead.
Download our free guide, Using Market Volatility to Your Advantage4, to learn how to turn uncertainty into strategic moves.
Inside, you’ll also find insights on:
- How market volatility can “shake up” complacent investors
- Potential bargains that may be uncovered through turbulence
- Why volatility may help prevent overheating and market “bubbles”
- What history shows us about opportunities for steady investors in turbulent markets
- Plus, more ways you may be able to benefit from a volatile market
If you have $500,000 or more to invest, download this free guide today by clicking on the link below.
Disclosure
2 Fred Economic Data. September 11, 2025. https://fred.stlouisfed.org/series/MORTGAGE30US#
3 ZIM may amend or rescind the free guide offer, Using Market Volatility to Your Advantage, for any reason and at ZIM’s discretion.
4 ZIM may amend or rescind the free guide offer, Using Market Volatility to Your Advantage, for any reason and at ZIM’s discretion
DISCLOSURE
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.
Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. Zacks Investment Research is a provider of earnings data and other financial data to institutions and to individuals.
This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel. Publication and distribution of this article is not intended to create, and the information contained herein does not constitute, an attorney-client relationship. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole.
Any projections, targets, or estimates in this report are forward looking statements and are based on the firm’s research, analysis, and assumptions. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. All expressions of opinions are subject to change without notice. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
Certain economic and market information contained herein has been obtained from published sources prepared by other parties. Zacks Investment Management does not assume any responsibility for the accuracy or completeness of such information. Further, no third party has assumed responsibility for independently verifying the information contained herein and accordingly no such persons make any representations with respect to the accuracy, completeness or reasonableness of the information provided herein. Unless otherwise indicated, market analysis and conclusions are based upon opinions or assumptions that Zacks Investment Management considers to be reasonable. Any investment inherently involves a high degree of risk, beyond any specific risks discussed herein.
The S&P 500 Index is a well-known, unmanaged index of the prices of 500 large-company common stocks, mainly blue-chip stocks, selected by Standard & Poor’s. The S&P 500 Index assumes reinvestment of dividends but does not reflect advisory fees. The volatility of the benchmark may be materially different from the individual performance obtained by a specific investor. An investor cannot invest directly in an index.