The Fed delivered a jumbo-sized rate cut this week.
The Federal Reserve delivered a jumbo-sized rate cut this week in a move widely viewed as a declaration of victory over inflation and a signal of relief for borrowers.
Few areas of the economy welcomed the news more than the nation’s sluggish housing market, where high mortgage rates have largely shut out homebuyers.
Experts who spoke to ABC News cautioned that the rate cut would not deliver an immediate drop in mortgage rates or a loosening up of the housing market.
Mortgage rates had already dropped over recent months in anticipation of the rate cut, they said. They forecasted a gradual thaw in the market as homebuyers perk up and borrowing costs slowly decline.
“This is a harbinger of good times to come, but we’re not there yet,” Susan Wachter, a professor of real estate at University of Pennsylvania’s Wharton School of Business, .
Here’s what to know about what the Fed’s rate cut means for mortgage rates and the housing market.
The interest rate cut likely will not have a significant impact on mortgage rates over the short term, experts said. That’s because mortgage rates had already moved due to an expectation of this rate decision.
The average interest rate for a 30-year fixed mortgage stands at 6.09%, according to Freddie Mac data released on Thursday.
That figure has plummeted more than a percentage point since May. The average interest rate for a 30-year mortgage has dropped even further from a peak reached last October.
“Everybody has been talking about an expected drop in the Fed Funds rate,” Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, . “The mortgage market heard that loud and clear.
