U.S. mortgage rates have fallen to their lowest level in two years, with the average 30-year fixed-rate mortgage dropping to 6.15% as of mid-September, according to the Mortgage Bankers Association (MBA). This decline comes in anticipation of the Federal Reserve's upcoming interest rate cut, which could be as much as half a percentage point. The recent drop in mortgage rates, which followed a similar decrease the previous week, has sparked increased demand for home loans and refinancing. Applications for mortgages have surged, driven by improved housing affordability as home prices have slowed in growth.

Refinancing applications now account for over half of all mortgage applications, surpassing the historic median of 48%, indicating that many homeowners are taking advantage of lower rates to reduce their monthly payments. U.S. mortgage rates, which peaked nearly a year ago at close to 8%, have since dropped by 175 basis points as the Federal Reserve signaled an end to its rate hikes. With the Fed set to announce further rate cuts and updated policy projections, analysts expect a more significant reduction in rates in the coming years.

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