Many often call for the Fed to lower rates to make housing more affordable, though shorter-term loans might seem appealing under lower rates, mortgage rates are mainly influenced by the long end of the yield curve, not directly managed by the Fed.
Many often call for the Fed to lower rates to make housing more affordable, though shorter-term loans might seem appealing under lower rates, mortgage rates are mainly influenced by the long end of the yield curve, not directly managed by the Fed.
For instance, when the Fed reduced rates in 2024, mortgage rates actually increased as the bond market adjusted for faster inflation expectations.
Lowering rates will only lead to a steady decrease in 30-year rates if the market believes inflation is under control.
Due to tariff uncertainty, aggressive rate cuts might not make mortgages cheaper and could have the opposite effect. Even as calls to reduce rates to boost the housing market persist, many overlook or ignore these economic dynamics.
There's a strong possibility of Powell cutting rates at the next Fed meeting, but this could once again push long-term rates higher.