The US 30-year fixed mortgage rate has dropped to 6.26% for the week ending September 18th. This is down from last week’s 6.35%. This rate is the lowest since October 2024, according to Freddie Mac data.

Mortgage Rate Trends

The 30-year mortgage rate has fallen to 6.26%, which is its lowest level in nearly a year. This decrease is part of a larger shift in the interest rate landscape and seems to be gaining traction as we enter the last quarter of the year. The drop is tied to growing expectations that the Federal Reserve will start cutting rates in early 2026. Recent inflation data supports this outlook, with the August 2025 Consumer Price Index showing a low 2.8%, nearing the Fed’s target. Additionally, the job market is slowing, with only 150,000 jobs added last month, giving the central bank further reason to ease policies. For traders, this presents an opportunity in interest rate derivatives. The 10-year Treasury yield, an important factor for mortgage rates, has now fallen below 3.75% for the first time since early 2025. It’s wise to prepare for this downward trend using futures on 10-year Treasury notes. This environment is particularly beneficial for sectors of the stock market that are sensitive to interest rates. Call options on homebuilder ETFs are likely to perform well as lower borrowing costs boost housing demand. Similarly, we should consider call spreads on the Nasdaq 100, as technology and growth stocks often thrive when capital costs drop.

Market Volatility

Market volatility has been decreasing, with the VIX now below 15. This indicates that the market is growing more confident in the economic outlook and the Fed’s expected actions. Lower option prices make buying calls more attractive, and also encourage strategies like selling puts on strong companies that we expect to rise. Reflecting on market behavior after the Fed concluded its hiking cycle in 2023, we saw a sustained period of strength in growth assets. The current environment closely resembles that period, and we can expect this trend to guide market direction for the coming months. Create your live VT Markets account and start trading now.

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