Part 4/9:
As the conversation unfolds, the topic of interest rates arises. Baker acknowledges that while rates have seen cuts, the Federal Reserve has been cautious about further reductions. Currently hovering in the range of 7%, these rates present a challenge for homebuyers and existing homeowners contemplating refinancing. The high mortgage rates, compounded with elevated home prices, create affordability issues that ripple out to new construction and residential markets.
“Interest rates are not just a Federal Reserve issue,” she notes. They are shaped by various factors, including the long-term inflation outlook. Baker points out that current mortgage rates aren’t solely tethered to the federal funds rate but also to an intricate tapestry of supply and demand dynamics within the bond market.