Mortgage rates continue to fall toward 6% as the housing market absorbs the Federal Reserve’s 0.5% rate cut on Wednesday, raising demand for refinancing and buying, stated Freddie Mac.

The average rate for a 30-year fixed mortgage fell to 6.09% on Thursday, down from 6.2% a week ago and 7.19% a year earlier, according to Freddie Mac’s Primary Market Mortgage Survey.

The rate for a 15-year fixed mortgage declined to 5.15%, down from 5.27% a week ago and 6.54% a year earlier.

"Mortgage rates continued declining towards the six percent mark, reviving purchase and refinance demand for many consumers," said Sam Khater, Freddie Mac's chief economist.

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"While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market. Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity."

Exchange-traded funds that hold mortgage stocks are sensitive to mortgage rates because they primarily invest in mortgage-backed securities (MBS) or mortgage-related assets, which are directly impacted by changes in interest rates.

IShares Mortgage Real Estate ETF holds 15.2% of the REIT, Annaly Capital Management, Inc. (NYSE:NLY), while VanEck Mortgage REIT Income ETF holds 11.1%.

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