You may be wondering…..will the big rate cut (September 18th) have an impact on the housing market? It may not make as much of an impact as you think. Let’s have a look at a few observations:
- Mortgage rates: you may think that rates will drop considerably. We are not so sure this will happen. The Fed’s rate cut was already anticipated to occur, so mortgage rates had been trending lower already, so much of the pricing with rates was already priced in.
- Lower mortgage rates may make your housing payment more appealing. But that could be offset by higher home prices. Rate cuts could bring more buyers to the market, brining in more competition for a limited supply of houses, driving prices up even further.
- Affordability will still be a problem. Median home prices have risen 50% over the last 5 years (Source: National Association of Realtors).
- During the pandemic, so many people refinanced to record-low rates. Most of these individuals have no intention of selling their home in exchange for another home that comes with a higher price tag and a higher mortgage rate.