With mortgage rates close to 7% again, the Fed’s rate cut won’t make any difference to homebuyers…

Mortgage rates I had a bad month. Or, let’s say, a bad three years. It’s no surprise that potential home buyers thirsty for the silver lining in the housing market.

Even with presidential elections The result is decided, a reduction in mortgage rates will not happen in the near future. Economic and political uncertainty likely won’t subside before the Federal Reserve’s November monetary policy meeting ends tomorrow.

Since the start of 2022, the Fed has raised interest rates 11 times to tame the economy. inflationcausing mortgage rates to skyrocket. All bets are that the Fed will continue to cut the federal funds rate on Thursday, its second cut in more than four years.

This week’s expected 0.25% interest rate cut won’t cause mortgage rates to suddenly fall by the same amount. Since the Fed cut rates by 0.5% in September, mortgage rates have risen rather than fallen.

Although central bank policy decisions and the economic outlook influence credit markets, the Fed does not directly set mortgage rates. Mortgage rates are very volatile and respond to many factorssuch as investor expectations, inflation and labor data. For example, after rates hit a two-year low in early September, an unexpectedly strong jobs report sent them back up nearly 7%.

Concerns about the presidential election only added fuel to the fire. Skepticism about the direction of the economy (with either candidate) is the main reason the 10-year yield rose last month. 10-year Treasury and mortgage rates are highly correlated and tend to move in tandem.

A Long-Term Look at Mortgage Rates

Bond market investors have panicked in recent weeks about how the next administration’s economic policies could lead to increased government spending and put upward pressure on rates. Rising inflation could prompt the Fed to keep interest rates higher for longer, delaying further rate cuts.

Since the results are clear, there should be less volatility in the bond market and mortgage rates. Experts do not predict a sharp decline in mortgage rates, regardless of Donald Trump’s victory as president and the actions of the Federal Reserve.

In the longer term, expect multiple future cuts and weaker economic data. Help mortgage rates go down. There is a lag between when the central bank starts cutting interest rates and when mortgage rates begin to decline consistently, he said. Jeff WenigerCFA and Head of Equity Strategy at WisdomTree Asset Management. Mortgage rates could take two to five years to reflect the full effect of the Fed’s cuts.

Experts also don’t know the new “floor” for mortgage rates – it could be 5% or 4% – but it all depends on the evolving economic outlook. Despite this, returning to pandemic rates 2-3% unlikely.

Read more: CNET’s Weekly Mortgage Forecasts

Don’t wait for the lowest mortgage rate

In the end there is there’s no way to predict the future of the housing market. The economy can be rocked by anything: from another major crisis to an unexpected rise in inflation. Without a crystal ball, your best bet is to monitor daily mortgage rate changes.

As mortgage rates begin to fall, some home buyers will enter the market. Others will push for even lower rates. Waiting too long can also be risky. Mortgage rates appeared to be approaching 6% last month but quickly reversed course. Now they are close to 7% again.

“There is no way to guarantee how mortgage rates will go. So you need to take advantage of opportunities when they come,” he said. Jeb SmithCNET Money expert and realtor with over 20 years of experience.

You Don’t rush to buy a house (even if rates fall) if it doesn’t make sense for your budget or lifestyle. Taking the extra time to improve your credit score and saving for a larger down payment will help you in the long run and will also help you save money on your future mortgage.

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