The Federal Reserve’s September 17 rate cut triggered significant activity in mortgage markets, though the most dramatic surge in applications actually preceded the official policy announcement.

The most significant spike in mortgage activity occurred in early September, before the Federal Reserve’s official rate cut announcement. For the week ending September 12, total mortgage applications jumped 29.7%, with refinance applications up 58%. This surge reflected market anticipation of the Fed’s eventual rate reduction.

Following the actual September 17 rate cut of 0.25 percentage points, mortgage application growth moderated significantly. For the week ending September 19, total applications increased 0.6%, with refinance applications rising only 1% week-over-week. However, refinancing now represents 60% of all mortgage activity.

Thirty-year fixed mortgage rates dropped to 6.26% for the week ending September 18, an 11-month low following the Fed’s rate cut. However, rates have since ticked upward, with current levels ranging between 6.39% and 6.46% as of September 24.

The rate environment remains favorable compared to recent months, with the Federal Reserve’s quarter-point cut lowering the federal funds rate to the 4.0%-4.25% range. This marked the first rate reduction since December 2024.

Applications for new home purchase loans continue showing strength, with demand running approximately 18% higher than the same period in 2024. Some weeks in September posted figures more than 20% ahead of last year, though recent data suggests application volumes are stabilizing rather than accelerating.

New home sales data for August 2025 showed particularly strong performance, with sales up 20.5% month-over-month to reach a seasonally adjusted annual rate of 800,000 units. This represented a three-year high and marked a 15.4% increase year-over-year. However, this surge occurred when mortgage rates averaged around 6.56%, preceding the significant rate declines that began in early September.

The Champaign County housing market demonstrates how increased inventory can coexist with accelerated sales velocity. Active listings increased to 700 properties by early September, yet homes are selling faster than before. Average time on market dropped to 22 days, compared to 34 days in July and 36 days in August 2024.

This acceleration coincided with rising pending sales, which grew to 191 contracts, marking nearly an 8% increase from July. The Champaign County Association of REALTORS® (CCAR) reported 255 properties sold in August, representing a decline from both July 2025 and August 2024. However, the median sale price held steady at $245,000, matching June levels and reflecting a 3.8% increase compared to the previous year.