When the Federal Reserve lowers interest rates, it’s trying to encourage economic growth by making borrowing cheaper. However, as we mentioned above, mortgage rates don’t always follow the Fed’s lead. While the Fed’s decisions do play a role, mortgage rates are influenced by other factors like inflation, the broader economy, and what investors in mortgage-backed securities are thinking.
Right now, mortgage rates are still hovering near 7%, which is higher than most people expected, even with the last three months of Fed rate cuts. If you’re wondering why, it’s because inflation is still a concern, and lenders are being cautious. Think of it like a seesaw—on one side is the Fed trying to lower rates, and on the other is inflation keeping them from dropping too much.
What Does This Mean for Your Home Buying or Refinancing Journey?
If you’ve been sitting on the sidelines waiting for rates to plummet, you might be waiting a while. But here’s the good news: A mortgage advisor can help you navigate this tricky landscape and find the best options for your situation.
Considering buying a home? Even with higher rates, there are strategies to make homeownership affordable. For example, some programs can offer lower initial payments, or you might find opportunities in a market where fewer buyers are competing for homes.
Thinking about refinancing? Refinancing might still make sense, especially if you’re looking to consolidate debt, tap some equity for renovations, or lock in stability with a fixed-rate mortgage.
Every financial situation is unique, and the market is full of opportunities if you know where to look. A professional mortgage advisor at Lower is like your personal guide through this maze of rates and programs. We’ll help you figure out whether now’s the right time to make a move or if waiting might serve you better.
Sources:
https://www.housingwire.com/articles/mortgage-rates-federal-reserve-rate-cut-december-2024/
