If the Fed Is Cutting Rates, Why Are Mortgage Rates Rising?

Published On Nov 7, 2024, 12:05 PM

Mortgage rates in the U.S. have risen to 6.79% for a 30-year mortgage, the highest level since July, primarily due to concerns about inflation stemming from President-elect Trump's proposed policies. The increase in rates has led to a decline in mortgage applications as buyers get deterred by higher borrowing costs. This rise comes despite expectations that the Federal Reserve will soon cut its benchmark rate. The dynamics between Trump’s inflationary policies and market perceptions of the Fed's actions will heavily influence future rate changes.

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The rise in mortgage rates could create caution among potential homebuyers and sellers, which may adversely affect real estate investment opportunities, especially in the residential sector. However, if the Fed implements rate cuts as anticipated, this could stabilize or even reduce mortgage rates in the medium term, easing pressure on the housing market.

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