Will the Fed's rate cut bring down mortgage rates?
Published On Sep 19, 2024, 1:09 AM
The article discusses the impact of the Federal Reserve's recent 50-basis-point interest rate cut on mortgage rates and the housing market. Despite the Fed's cut, which was anticipated by the market, mortgage rates have already begun to decrease slightly, with the current average 30-year fixed rate around 6.20%. However, about 80% of existing mortgage holders have rates below 5%, limiting their willingness to sell and thus contributing to low housing inventory. Experts suggest that while the rate cut may have some short-term effect, significant declines in mortgage rates will depend on economic conditions moving forward. If the economy weakens, lower mortgage rates may follow, but improvement could lead to higher rates again.
Stock Forecasts
XHB
Positive
The housing market remains stagnant due to high prices and limited inventory. The Fed's recent rate cut may not have a substantial impact on mortgage rates immediately but could influence future rates dependent on economic conditions.
VNQ
Positive
The real estate investment trusts (REITs) sector might benefit from a stabilized mortgage rate environment, contingent on inventory levels and buyer sentiment improving over time as rates adjust.
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