Mortgage rates already have a Fed rate cut baked in

Summary

---

Marketplace Morning Report – “Mortgage rates already have a Fed rate cut baked in”

Date: September 17, 2025
Host: David Brancaccio
Main Theme:
A concise look at the anticipated Federal Reserve rate cut, its impact on mortgage rates, global business headlines, and recent trends in U.S. carbon emissions—all before U.S. markets open.

---

Key Discussion Points & Insights

1. Anticipating a Federal Reserve Rate Cut and Mortgage Rate Impacts

• [01:02] David Brancaccio: Sets the stage: Markets are awaiting a probable 0.25% Fed rate cut, with a focus on Jerome Powell’s upcoming (and “vague”) remarks about jobs and inflation.
• Current mortgage rates: Average 30-year fixed rate drops sharply to 6.13%—lowest in over a year.
• Jessica Lautz (National Association of Realtors):
  • “There are a lot of factors that go into mortgage interest rates…Yes, Federal Reserve policy is one part.” [01:53]
  • Mortgage rates are also dictated by supply and demand, the 10-year Treasury yield, and inflation.
  • Insight: Mortgage rates move in anticipation of Fed actions, not just in reaction.
    • “Because there’s been so much fodder about a potential rate cut over the last week…the mortgage market is actually already starting to respond.” [02:26]
• Kenny Lee (Zillow & StreetEasy):
  • Fed’s future direction is uncertain, keeping mortgage rate forecasts tricky.
• Holden Lewis (NerdWallet):
  • Practical advice for buyers:
    • “The difference between 6.5% and 6% [on a $400K mortgage] is $130 a month, and for a lot of people…that $130…really is the dividing line between not being able to afford a home and being able to afford a home.” [03:23]
  • Key point: Mortgage affordability is hugely sensitive to small rate changes.
  • Other costs like insurance premiums—rapidly rising—should factor into homebuying decisions.

2. Home Price Trends and Regional Differences

• Jessica Lautz:
  • Home prices aren’t moving the same everywhere: “They’re up in Boise, Idaho, New York, and Chicago…while…in Texas and Florida, they have actually been falling in the last year.” [03:44–03:58]
  • Buyers must look beyond rates to local market conditions.

3. Microsoft’s $42 Billion UK AI Investment

• [04:18] David Brancaccio: Big tech news—Microsoft’s largest overseas investment ever—timed with President Trump’s visit.
• Zoe Kleinman (BBC Technology Editor):
  • Money to be spent on new UK data centers and a “powerful supercomputer.”
  • UK Labour leader Keir Starmer: This is a “step change” in US-UK relations, bringing “growth, security and opportunity up and down the country.” [04:34]
  • Satya Nadella (Microsoft CEO):
    • “I want to see [AI’s promise] ultimately in the economic growth and in the GDP growth…not in 10 years, but maybe five years. But it does take time. I think there’s no shortcutting the time for diffusion and also change.” [05:00]
    • Adds words of caution: AI is not a guaranteed growth engine, and booms can turn into bubbles. High energy use is a concern, but benefits—especially in healthcare and productivity—are compelling.

4. FedEx Profits & Shift in U.S. Tariffs

• [05:37] David Brancaccio: Looks ahead to FedEx reporting lower quarterly profits due to the extension of tariffs to lower-value overseas shipments, ending the “de minimis exemption.”

5. U.S. Carbon Emission Trends

• [07:05] David Brancaccio: U.S. per capita carbon output is down 30% in two decades (EIA data).
• Henry Epp Reports:
  • Shift from coal to natural gas in the late 2000s (due to fracking) played a big part.
  • Recent decade has seen more wind/solar.
  • Quote – Kevin Nakolin (EIA):
    • “We had a big boom in natural gas powered electricity generation.” [07:37]
  • Kenneth Gillingham (Yale):
    • Falling emissions may slow as electricity demand rises, keeping coal viable for longer [08:07-08:26].

---

Notable Quotes & Memorable Moments

• “There are a lot of factors that go into mortgage interest rates…Federal Reserve policy is one part.”
  — Jessica Lautz, [01:53]
• “Because there’s been so much fodder about a potential rate cut over the last week…the mortgage market is actually already starting to respond.”
  — Jessica Lautz, [02:26]
• “The difference between 6.5% and 6% [on a $400K mortgage] is $130 a month, and…that $130…really is the dividing line between not being able to afford a home and being able to afford a home.”
  — Holden Lewis, [03:23]
• “I want to see [AI’s promise] ultimately in the economic growth and in the GDP growth…I think there’s no shortcutting the time for diffusion and also change.”
  — Satya Nadella, [05:00]
• “Per capita, the US carbon output fell 30% [in] the last two decades.”
  — David Brancaccio, [07:05]

---

Timeline of Important Segments

• [01:02] — Fed rate cut preview, immediate mortgage rate context
• [01:53–04:18] — Guest analysis on mortgage rates and affordability (Jessica Lautz, Kenny Lee, Holden Lewis)
• [04:18–05:37] — Microsoft’s UK AI push and economic/cultural context (Zoe Kleinman, Satya Nadella)
• [05:37] — FedEx, shifting U.S. tariffs, global trade impact
• [07:05–08:31] — U.S. carbon emissions decline explained (Henry Epp and guests)

---

Summary

This Marketplace Morning Report gives a brisk, insightful rundown on a potential Fed rate cut—which markets and mortgages have largely priced in already—how buyers should think about home affordability, Microsoft’s ambitious $42 billion UK investment in AI, and the ongoing fall (and new challenges) in U.S. carbon emissions. The show is a dense but accessible primer for anyone needing to understand the day’s financial and economic headlines.

Transcript

[Multicare Narrator]

Our state has changed a lot in the last 140 years. We know because Multicare has been here guided by a single making our communities healthier. That comes from making courageous decisions, partnering with local communities to grow programs and services, and expanding healthcare access to those who need it most. Together, we're building a healthier future. Learn [e-mail].

[Grainger Narrator]

This is the story of the one as a maintenance supervisor at a manufacturing facility, he knows keeping the line up and running is a top priority. That's why he chooses Grainger, because when a drive belt gets damaged, Grainger makes it easy to find the exact specs for the replacement product he needs and next day delivery helps ensure he'll have everything in place and running like clockwork. Call 1-800-GRAINGER Click grainger.com or just stop by Grainger for the ones who get it done.

[David Brancaccio]

When will home loans click into lower gear? You may have just heard the click. I'm David Brancaccio in Los Angeles. Here is what we're expecting, subject to the winds of fate. In just over seven hours, we'll get the bulletin from the Federal Reserve lowering a key short term interest rate by 1/4 of a percentage point. And soon after, the central banker in chief, Jerome Powell, will hold a briefing on signs the job market is weakening and the state of inflation. That'll be part for hints about how much and when more rate cuts might come, and Powell will be vague in his ANSWERS. The average 30 year fixed rate mortgage fell sharply in the last day, 6.13% now, the lowest in more than a year. Using Mortgage News Daily's calculation, the Mortgage Bankers association has its own update on the way. Here's Marketplace's Carla Javier.

[Jessica Lautz]

There are a lot of factors that go into mortgage interest rates, says Jessica Lautz, vice president of research at the national association of Realtors, Houston. Yes, Federal Reserve policy is one part.

[Multicare Narrator]

But also it's really looking at the market. It's looking at supply and demand for mortgages.

[Jessica Lautz]

Also the 10 year treasury yield. Also inflation. You get the idea. So if the Fed cuts interest rates by say, a quarter of a percentage point, Lout says mortgage interest rates probably won't immediately decrease by the exact same amount because they've already come down.

[Multicare Narrator]

We actually already know because there's been so much fodder about a potential rate cut over the course of the last week or so that the mortgage market is actually already starting to respond. And so we are seeing that the 30 year fixed mortgage interest rate has actually declined to the lowest rate in.

[Marketplace Reporter]

Nearly a year at this point. Where mortgage rates will go from here really depends on what Chair Powell will say at the press conference.

[Jessica Lautz]

Kenny Lee at Zillow and Street Easy says as the market tries to divine how far the Fed will go in.

[Marketplace Reporter]

Cutting rates, that will likely filter into the mortgage rate and the trajectory of the mortgage rate throughout this year as well, which have been quite tough to.

[Jessica Lautz]

Predict given that uncertainty. Holden Lewis with the personal finance website NerdWallet has some advice for prospective homebuyers trying to decide if they can afford to get into the market. Let's say you need a $400,000 mortgage.

[Marketplace Reporter]

The difference between 6.5% and and 6% is $130 a month, and for a lot of people, just that $130 a month difference really is the dividing line between not being able to afford a home and being able to afford a home.

[Jessica Lautz]

But remember, the cost of the house itself is a big part of that calculation, and home prices vary greatly depending on where in the country you're buying. They're up in Boise, Idaho, New York and Chicago, for example. While as Nerd Wallets Holden Lewis points.

[Marketplace Reporter]

Out, home prices in some markets, especially in Texas and Florida, have actually been falling in the last year.

[Jessica Lautz]

Lewis also reminds homebuyers to factor in other monthly costs when assessing affordability, like home insurance premiums, which have been rising significantly. I'm Kyla Javier for Marketplace.

[David Brancaccio]

Microsoft has announced a $42 billion investment in Britain's artificial intelligence industry. That's Microsoft's biggest bet outside the US. The tech prosperity deal coincides with President Trump's visit to Britain. Here's the BBC's technology editor, Zoe Kleinman.

[Zoe Kleinman]

A lot of those billions will be spent on new data centres, and Microsoft will also now be involved in the development of a powerful supercomputer. Sakir Starmer said the agreement represented a general step change in Britain's relationship with the US that would deliver growth, security and opportunity up and down the country. Microsoft's boss, Satya Nadella, told me he hopes the technology will boost Britain's economy by 10% within five years.

[Marketplace Reporter]

Always, whenever anyone gets excited about AI, I want to see it ultimately in the economic growth and in the GDP growth. So our Hope is not 10 years, but maybe five years. But it does take time. I think there's no shortcutting the time.

[Million Bazillion Narrator]

For diffusion and also change.

[Zoe Kleinman]

But it's a prediction, not a promise. Mr. Nadella also warned AI shouldn't be overhyped and acknowledged that all tech things are about booms and busts and bubbles. He conceded that artificial intelligence requires high energy consumption, but said this was outweighed by its benefits, especially in health care, public services and productivity.

[David Brancaccio]

And FedEx today is expected to announce quarterly profits crimped a bit by the extension of tariffs to lower value shipments from overseas. The end of the de minimis exemption.

[Dell AI Narrator]

This Marketplace podcast is supported by Dell Huge savings DELL AI PCs are here, and it's a big deal. Why? Because Dell AI PCs with Intel Core Ultra processors are newly designed to help you do more for faster it's pretty amazing what they can do in a day's work. They can generate code, edit images, multitask without lag draft emails, summarize documents, create live translations. They can even extend your battery life so you never have to worry about forgetting your charger. It's like having a personal assistant built right into your PC to cover the menial tasks so you can focus on what matters. That's the power of Dell AI with Intel inside with deals on Dell AI PCs like the Dell 16 plus starting at $749.99, it's the perfect time to refresh your tech and take back your time. Upgrade your AI PC today by visiting Dell.com deals that's Dell.com deals.

[David Brancaccio]

In order. China, the US and India are the largest producers of planet warming greenhouse gases, but per capita the U.S. carbon output fell 30% last two decades. That's from the Federal Energy Information Administration. Now one part of that is how we generate electricity marketplaces, henry Epp reports.

[Henry Epp]

Back in 2005, we burned a lot of coal to keep the lights on in the US But a few years later our energy mix started to change, says Kevin Nakolin at the Energy Information Administration.

[Marketplace Reporter]

We had a big boom in natural gas powered electricity generation.

[Henry Epp]

This was when fracking became a big thing. Natural gas is still a fossil fuel, but it produces less carbon dioxide than coal. And in the late 2000s, using more natural gas led companies to shut down a lot of coal plants, which lowered carbon emissions. Then in the past decade or so.

[Marketplace Reporter]

We saw a lot of that being growth in renewable sources like wind or solar.

[Henry Epp]

But going forward, emissions might not fall at the same pace, says Kenneth Gillingham at Yale. In part because electricity demands demand is rising. To meet that demand, existing power plants.

[Marketplace Reporter]

That may have become uneconomic are now becoming more economic than they were previously and are more likely to stay on.

[Henry Epp]

Longer, including coal plants. I'm Henry AP for Marketplace, and in.

[David Brancaccio]

Los Angeles, I'm David Brancaccio. You're listening to the Marketplace Morning Report from APM American Public Media.

[Million Bazillion Narrator]

Sometimes kids ask questions that reveal just how much adults still need to learn, like can you explain what causes an economic bubble? And why are things so expensive at the airport? Or how much national debt might be too much? Fear not. Million Bazillion is back with a new season to help you and your kids become pros at understanding how money shapes the answers to all those questions and more. Listen to the latest season of Million Bazillion on your favorite podcast app.