Federal Reserve Chairman Jerome Powell spoke of changes in interest rates. Here's what it means for mortgage rates.
The mortgage market has been operating in a high-rate environment for the last several years, largely due to the Federal Reserve's aggressive monetary policy aimed at combating inflation. After a series of rate hikes, the Fed's benchmark rate has remained at a 23-year high for the past year, significantly impacting borrowing costs across the board, including mortgage rates. However, recent economic indicators suggest a potential shift in this landscape.
And while Fed rate cuts do not directly impact borrowing rates, they do exert a significant influence on the broader interest rate environment, which in turn affects mortgage rates. So, should that rate cut happen next month, it would likely impact the trajectory of mortgage rates. But what would the ripple effect on mortgage rates be? While there is a possibility of a 50 basis point cut, expectations are that the federal funds rate will be reduced to a range of 5.00% to 5.
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