There was one big headline dominating the real estate news last week: interest rates. With the Feds announcing a 0.5% cut to the Fed Funds Rate cut, you might expect that interest rates will immediately drop. However, that’s not the full story. In fact, according to Mortgage News Daily (MND), rates were trending slightly higher. The publication included a helpful list of why this occurred:
- While the Fed meets eight times each year, mortgage rates move every day
- Bonds, which also influence mortgage rates, are also in flux every day
- Mortgage rates were already trending down prior to the Fed meeting and announcement, giving the market a “long heat start toward lower rates”
- Traders anticipated that the Fed would annouce a rate cut and it wouldn’t make sense to, according to MND, “keep a tradeable rate/bond in higher territory,” adding that “nothing was stopping them [from trading mortgage rates lower] and that’s why rates have dropped so much in recent years”
The truth is, it’s really hard to predict what will happen with mortgage rates, which are impacted by the Fed, bonds and a host of other economic factors. They tick up, they tick back down and everybody knows there will be two more Fed meetings – one in November, another in December – so we’ll have to wait and see what happens then.
As MND pointed out, we’ll still have to wait and see what all this will mean for interest rates. The Fed Funds Rate cut doesn’t necessarily mean rates will start plummeting. Rates have been in a downward trajectory for several months, and this latest piece of news lends more credence to the prediction that rates will continue trending down.
What’s the big takeaway here? Ask your real estate agent for guidance. They’re keeping up with exactly whats happening to rates on a daily basis, and they can best help you plan and strategize on how to take whatever is happening with rates — and with the real estate market — and leverage that trend to your advantage.
Of course, I’d be more than happy to chat with you about how this news may impact your real estate goals. Contact me to learn more!
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Andrew Manning • REALTOR® • Berkshire Hathaway HomeServices California Properties • DRE: 00941825 • 818-380-2147 • andrew@andrewmanning.com