09/10/2024
Not an entertaining post but educational for those who care about the mortgage market and the Federal Reserve lowering rates later this month. It’s brief.
“Mortgage interest rates will not fall for now!
While the Federal Reserve doesn't set mortgage rates they are often influenced by the Fed's monetary policy decisions, among other factors. In fact, mortgage lenders don't have to wait on the agency to lower the federal funds rate before adjusting their loans. As such, experts suggest that any September rate reduction by the Fed is already factored into current lending rates.
"Mortgage rate movements are largely anticipatory of the Fed's actions, which means that a lot of the recent decline in mortgage rates is already reflecting the expected rate cut in September," says Dr. Selma Hepp, the chief economist at CoreLogic. "Nevertheless, while the September rate cut is rather certain, the dynamics between inflation and employment will determine how much and how often the Fed cuts rates for the rest of the year."
Shmuel Shayowitz, the president and chief lending officer at a large mortgage banker, also notes the market has already accounted for the Fed's anticipated September rate cut.
"At this point, there is 100% certainty that there will be at least a 25 basis point cut, which is currently reflected in mortgage rates," says Shayowitz. "Mortgage yields broke out of their range-bound trading on July 31st, most likely because of this sentiment, and we do not expect to see further improvement in mortgage rates in anticipation of the September 18th Fed meeting, absent a more aggressive rate outlook."
