Mortgage Rates Decline Across US, UK Amid Anticipated Central Bank Cuts

Mortgage rates in the U.S. are showing signs of decline ahead of a highly anticipated Federal Reserve rate cut expected in September 2025, driven by weaker job growth and inflation concerns. The slowdown in job creation and a rise in unemployment to 4.3% have increased expectations for the Fed to reduce rates, which in turn has lowered yields on the 10-year Treasury note and mortgage rates, thereby improving affordability for homebuyers and refinancing homeowners. This trend is reflected in increased buyer activity and refinancing applications, with refinancing now comprising nearly 47% of mortgage applications, the highest since last October. Similar dynamics are observed in the UK, where the Bank of England's recent rate cuts have boosted mortgage lending commitments, despite a quarterly decline in mortgage advances, signaling growing market resilience. However, housing market gains may face headwinds if inflation data reduce the likelihood of multiple rate cuts, and slower job growth tempers housing demand. Overall, while the Fed’s rate decisions are pivotal, mortgage rates are also influenced by bond market dynamics and economic indicators, creating a cautiously optimistic outlook for the housing market entering the fall season.