There has been a spike in mortgage applications as interest rates have dropped to the lowest level since October 2024. Brown | AFP via Getty Images)Mortgage rates are finally falling, and just saw their biggest weekly drop in the past year. The average interest rate for a 30-year fixed-rate mortgage in the past week was 6.35%, according to Freddie Mac , down from 6.5% a week earlier. The Treasury yields that affect mortgage rates moved lower with the data that the labor market is weakening. But a rate cut may not mean a drop in mortgage rates, as the expectation of a cut is already likely priced into current rates.