As we enter September, the focus is on the Federal Reserve, which is expected to cut the Federal Funds Rate due to cooling inflation and a slowing job market. Mark Zandi from Moody’s Analytics predicts, “They’re ready to cut...which we won’t [be surprised by].”
Why does this matter? The Federal Funds Rate impacts mortgage rates. While a single cut might not drastically lower rates, it could contribute to a gradual decline. Mike Fratantoni from the Mortgage Bankers Association expects mortgage rates to fall further as the Fed begins a rate-cutting cycle, likely continuing through 2025.
How Will This Affect Housing?
Alleviating the Lock-In Effect: Lower rates could encourage current homeowners, who feel stuck with low-rate mortgages, to consider selling.
Boosting Buyer Activity: Lower rates can reduce the cost of homeownership, making it easier for potential buyers to enter the market.
While significant rate drops aren't expected, the anticipated cuts could gradually lower mortgage rates. As Jacob Channel from LendingTree notes, “Timing the market is impossible...Buy now only if it’s a good idea for you.”
Bottom Line: A Federal Funds Rate cut will likely benefit the housing market over time. Connect with a local real estate agent to explore your options.
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