The Federal Open Market Committee (FOMC) is the Federal Reserve’s monetary policy-making arm. The committee – often referred to as the Fed or simply the Federal Reserve – holds eight regularly scheduled meetings per year. One of these meetings will take place this week.
Investors, economists and policymakers have September 17th and 18th marked on their calendars, as the decisions made by the FOMC often have a major impact on U.S. economy. One decision people are anxiously awaiting is whether or not there will be a Federal Funds Rate Cut and how aggressive it will be. Many financial experts anticipate there will be a cut. Some of them indicating an 100% certainty and suggest current mortgage rates are already being affected.
How a Fed Rate Cut Impacts Mortgage Rates
While the Federal Reserve doesn’t set mortgage rates, they are often influenced by the Fed’s monetary policy decisions – including rate cuts.
Generally speaking, when mortgage rates are lower it can help more people qualify for loans as this gives them more buying power. It also makes owning a home more affordable as a mortgage rate can have a big influence on your monthly payment.
What Should Buyers Expect from the September Fed Rate Cut?
Buyers shouldn’t expect a drastic drop in mortgage rates from the Federal Funds Rate cut. But experts predict the Fed Rate Cut will likely lead to a moderate decline in mortgage rates. As mentioned, some experts suggest that any September rate cut by the Fed is already factored into current mortgage rates. Dr. Selma Hepp, the chief economist at CoreLogic says:
“Mortgage rate movements are largely anticipatory of the Fed’s actions, which means that a lot of the recent decline in mortgage rates is already reflecting the expected rate cut in September. If the job market continues to cool or the cooling intensifies, the Fed could cut more aggressively than the two cuts that are currently being priced in the market. In that case, mortgage rates could fall more rapidly.”
Final Thoughts
While it’s tempting to wait for mortgage rates to fall before making your move, mortgage rates are not the only indicator of what you’ll be paying each month. Keep in mind, lower interest rates will often bring more buyers to the market. This increased demand can lead to a rise in home sales, driving up home prices.
In a perfect world, buyers would have low house prices and low interest rates. While it’s smart to to be watchful of both of these cost factors, be careful not to wait too long for that golden moment of perfect conditions. These perfect conditions are rare and waiting too long might cause you to pass up a great buying opportunity.
About Michigan Mortgage Lender, Julie Krumholz from Superior National Bank
With over 35 years of experience in the mortgage industry, Julie Krumholz from Superior National Bank is a trusted resource and friend to homebuyers. Julie has worked in processing, closing, loan origination, underwriting, and QC auditing and has even co-owned a mortgage brokerage firm. Julie applies her knowledge to help first-time and seasoned homebuyers with a seamless homebuying experience.
