How the Federal Reserve's rate policy affects mortgages
Published On Dec 21, 2024, 8:00 AM
The article discusses how the Federal Reserve's interest rate policies impact mortgage rates in the U.S. Despite the Fed lowering its interest rates three times in 2024, mortgage rates are not expected to decrease significantly, with estimates hovering between 6.5% to 7%. This is due to mortgage rates being more closely linked with long-term Treasury yields rather than directly with Fed rates. Factors such as the Fed's handling of mortgage-backed securities and ongoing fiscal policies are influencing these rates. Key takeaway is that even as federal rates fall, homebuyers may not see immediate relief in mortgage costs.
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Mortgage rates are likely to remain elevated with the recent Fed rate cuts, primarily due to the influences of Treasury yields and the Fed's balance sheet policies. This could lead to a continued cooling in the housing market as affordability challenges persist for potential buyers.
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