Recent moves in mortgage rates have industry experts predicting that this fall could feel like a “new spring” for originations — even as the threat of a federal government shutdown looms.
On Tuesday, HousingWire’s Mortgage Rates Center, which tracks locked loans, showed that 30-year conforming loan locks averaged 6.34% — just one basis point (bps) higher than a week ago but 11 bps lower than two weeks prior. Jumbo 30-year rates rose 2 bps to 6.24%, while FHA 30-year loans increased 3 bps to 6.18%.
Spring is typically the busiest season for mortgage activity. But in 2025, higher rates, trade-war concerns and the Federal Reserve’s wait-and-see approach kept borrowers on the sidelines. Now, conditions are shifting.
“October should be the best funding month of the year,” said Kevin Peranio, chief lending officer of Paramount Residential Mortgage Group (PRMG). “It’s more of a refinance story but purchases are getting a lift too.”
Todd Bitter, chief sales officer at UMortgage, said that over the last several years, we’ve seen a lot of “false starts,” with rates starting to come down but then going right back up.
“I do think this is the true turning point this time – I don’t expect rates to massively fall over the next couple months,” Bitter said. “We will see rates start trending lower, but not just fall, and by the second quarter of next year, which isn’t that far off, we can see a significant drop of rates.”
For many lenders, the “spring market” has effectively shifted five months later, with activity picking up sharply — though not all of it has translated into closings yet, Bitter said.
The rates trend
Logan Mohtashami, Lead Analyst at HousingWire, said that “the last eight-weeks have been the best eight-week period in 2025” from a purchase applications perspective, since mortgage rates fell from 6.64% toward 6%.
Rates have been supported not only by the Fed’s September quarter-point cut but also by improving spreads, which narrowed to 2.15% last week from a peak of 3.10% in 2023.
“Mortgage rates are 0.39% better this year because of spreads on average,” Mohtashami added. “If the spreads today were as bad as they were at the peak of 2023, mortgage rates would currently be 0.95% higher.”
Bitter added that bond traders expect the Fed to accelerate cuts amid a weakening labor market — and are already pricing in the likelihood that President Donald Trump will replace Fed Chair Jerome Powell with a more dovish successor next year.
“That is probably already factoring in a little bit; let’s face it: rates always move on speculation, not on the news, so we’ll probably really start feeling the effects of that in the first quarter next year.”
First American deputy chief economist Odeta Kushi said that purchase application data from September indicates additional momentum due to buyers responding to lower rates. NAR’s Pending Home Sales Index rose 4.0% month over month in August and a 3.8% increase compared to a year ago.
“This suggests that the modest improvement in pending sales may continue into the fall, especially if affordability conditions stabilize,” Kushi said in a statement. “Affordability challenges and structural inventory shortages continue to weigh on buyer activity. Lower rates help, but they are not a panacea for the housing market.”
Shutdown remains a risk
On the challenges front, as of Tuesday afternoon, lawmakers in Congress were still pushing the federal government closer to a shutdown, with a midnight deadline looming to pass a temporary funding bill. The uncertainty alone could discourage prospective buyers from entering the market.
“Federal employees who are furloughed or working without pay often see their incomes delayed or reduced, making it more difficult to cover mortgages, rent and everyday expenses,” said Realtor.com Senior Economist Anthony Smith in a statement. “Beyond household finances, shutdowns can also interfere with the mechanics of buying and selling homes.”
In past shutdowns, agencies such as the IRS were unable to verify borrower incomes, Smith noted — a lower risk this time given its current funding status. However, closings that require new flood insurance policies could face delays, since the National Flood Insurance Program cannot issue policies without renewed authorization.
