The Federal Reserve kicked off its interest rate easing cycle with a 50-basis-point cut on Wednesday. But what does that mean for your mortgage?
Yahoo Finance Senior Housing Reporter Claire Boston joins Wealth! to discuss what the rate cut means for homebuyers who have been sitting on the sidelines amid elevated mortgage rates, which haven been consistently cooling over the past several months.
For more expert insight and the latest market action, click here to watch this full episode of Wealth!
This post was written by Melanie Riehl
The Fed cutting rates is welcome news if you're looking to take out a mortgage to buy a home and to break down what you need to know about mortgage rates. We brought Yahoo Finance's very own Claire Boston here in studio with us. Claire, great to have you here.
Thanks so much for having me.
Absolutely. So let's talk about this. The Fed makes the decision to cut rates 50 basis points. But now what? What does that mean for potential home buyers that have been on the sidelines to this juncture?
Right. So right now we have mortgage rates at right around 6.2% for the 30-year fixed. We're looking for them to maybe fall a little bit more in the coming weeks. But the counterintuitive thing is that a lot of the Fed's move has already been priced in. Mortgage rates have been falling all summer. And as a result, that probably puts a ceiling on how much lower they're going to go. You know, we're probably looking for range bound rates for the rest of this year.
Yeah, and so with that in mind, I mean existing home sales, uh as we're continuing to track them in and some of the data that we've gotten over the course of this week with new permits, construction, how will this overall impact home affordability as well?
Yes. So the issue is that overall homes are still very, very expensive in this country. And we didn't really see much buying over the summer. You know, when rates go lower, that does allow people to refinance, it allows people to have a lower monthly payments. But the really big issue is just that we are near all-time highs in housing prices. So, you know, maybe lower rates will bring more people off the sidelines this fall, but we still have a really big housing affordability issue in this country.
Affordability and it also comes back out to build outs as well, the amount of construction that we're still anticipating to fill that gap. Also, Claire, thanks so much for taking the time here with us joining us on set on Yahoo Finance.