Despite hopes for lower mortgage rates, homebuyers are now facing even higher rates after the Federal Reserve increased interest rates in response to strong job growth.
Armstrong Williams takes on the news of the week and asks the questions you want answered. Don't miss our weekly town hall.FILE - A development of new homes is shown in Middlesex Township, Pa., on Apr. 19, 2023. On Thursday, March 21, 2024.
After waiting years for interest rate cuts from the Federal Reserve, in the hopes that they would aid in lowering mortgage rates, home buyers are now facing even higher mortgage rates.The September jobs report showed significant job growth, which led investors to believe the economy was gaining strength.
Though this type of ripple effect isn't uncommon, it's a stark difference from the last time the Fed slashed interest rates in 2020, which resulted in a quick decline in mortgage rates. A similar situation to the current climate happened back in 2019. The Fed made multiple dramatic interest rate cuts and short-term lending rates dropped butsuit, mostly due to economic growth expectations and fluctuations in the 10-year treasury bond yield. Another example is the 2008 financial crisis, when the Fed cut rates so aggressively they were almost at zero, but mortgage rates still didn’t fall and that had to do with the housing market crisis and lender’s concerns about credit risk.
potential buyers are being priced out and homeowners aren't willing to let go of the low interest rates they got in 2020 and 2021, causing a stagnation in the housing market.found just 2.5% of U.S. homes changed hands this year, which is the lowest rate in decades. Experts say the Fed is supposed to make another rate cut in November, but we shouldn’t expect mortgage rates to drop by much.we’ll likely see rates drop in 2025, but not back to those record lows we saw a few years ago.
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