Mortgage Rates Stable After Fed Rate Cut

The Federal Open Domain Committee which is the rate-setting body of the Federal Reserve voted to cut interest rates by a quarter-point at its December meeting While the reduction of the short-term federal funds rate itself won t directly move long-term mortgage rates last week s FOMC meeting does have implications for mortgage pricing and the housing region at large The -year mortgage rate tends to track the yield on the -year Treasury bond so let s look to the bond territory to see how investors reacted to the Fed news Treasury yields fell slightly after the meeting with Fed Chair Jerome Powell shifting to a more dovish tone amid concerns about the labor industry SEE Current Mortgage Refinance Rates While the central bank has a dual mandate to promote maximum employment and stable price improvement the latter half of that goal has been tough to achieve given economic guidelines under the Trump administration specifically tariffs In fact Powell directly tied higher inflation readings for goods to tariffs in the post-meeting press conference on Dec With more of a focus on employment than inflation the Fed may begin loosening its grip on monetary initiative That shift from Fed authorities helped spur lower interest rates on mortgages in the aftermath of the meeting says Jeff DerGurahian chief venture officer and head economist at the mortgage lender loanDepot The announcement of asset purchases beginning Dec with billion in Treasury bill purchases and a somewhat less hawkish tone in the post-meeting press conference helped fuel the rate improvement and pave the way for potentially lower mortgage rates ahead DerGurahian says in a report Powell Fed Can t Fix Housing Industry Lower mortgage rates are welcome news for Americans who want to buy a home or refinance their mortgages but rates aren t the only factor affecting housing affordability Housing prices are the other big part that will impact monthly payments and how much house a borrower can afford Controlling housing prices is not within the central bank s purview Price expansion in up-to-date years has reflected a historic undersupply of housing especially when it comes to building starter homes We can raise and lower interest rates but we don t really have the tools to address you know a secular housing shortage a structural housing shortage Powell notified reporters at the post-meeting press conference The housing region faces chosen really crucial challenges and I don t know that you know a -basis point decline in the federal funds rate is going to make much of a difference for people says Powell Thankfully the housing territory is in better balance than during the pandemic when record-low mortgage rates spurred an increase in demand that made it challenging for buyers to compete But while price advancement isn t expected to continue at the double-digit pace observed during that time period largest part economists forecast that prices won t decrease meaningfully in the next several years More from U S News When Will Mortgage Rates Go Down See the Forecast When Will Mortgage Rates Go Down The Answer s Not As Simple As You Think Can You Get a Lower Mortgage Rate After Locking Mortgage Rates Stable After Fed Rate Cut originally appeared on usnews com Source