What will the Federal Reserve do...and does it matter?

Fed Decision: A Ripple Effect on Real Estate

The Federal Reserve's decision today will send ripples through the housing market, impacting affordability, buyer behavior, and potentially even home prices. While the Fed doesn't directly set mortgage rates, their influence on the federal funds rate plays a significant role.

Higher Borrowing Costs Likely on Hold

Economists predict a pause on further interest rate hikes, following a period of aggressive increases in 2022. "The Fed's tightening bias seems to be over," says Mike Fratantoni, chief economist at the Mortgage Bankers Association. "[This] is good news for the housing and mortgage markets."

Affordability: A Double-Edged Sword

A steady federal funds rate could translate to stable mortgage rates, offering some relief to potential buyers. "This might provide a window of opportunity for those looking to lock in reasonable rates," says a spokesperson for realty firm Letterio Haug. However, current rates, hovering around 7%, remain considerably higher than the lows of recent years.

Looking Ahead: Potential Rate Cuts

The possibility of future rate cuts is a topic of discussion. "The focus has shifted from hikes to the pace of cuts," says Fratantoni. Reduced borrowing costs could significantly improve affordability, potentially leading to a more active market. However, the timing and extent of these cuts remain uncertain.

The Federal Reserve's decision will undoubtedly influence the real estate market, but the full impact will likely unfold over time. Homebuyers and sellers should stay informed about the evolving situation and consult our team of agents and lender partners to make informed decisions