WASHINGTON >> Mortgage rates dropped this week on expectations that the Federal Reserve would start cutting interest rates on Sept. 18, but will likely not offer an immediate boost to the housing market as home prices remain elevated.

The average rate on the popular 30-year fixed-rate mortgage fell to 6.20%, the lowest since February 2023, from 6.35% last week, mortgage finance agency Freddie Mac said in a statement today. It averaged 7.18% during the same period a year ago.

The average rate on the 15-year fixed-rate mortgage declined to 5.27% from 5.47% last week. That compared to an average of 6.51% a year ago. The U.S. central bank is expected to kick off its easing cycle with a 25 basis points rate cut next week. “But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages,” said Sam Khater, Freddie Mac’s chief economist.