Hi, this is Chris Nash with your monthly market update.
For the first time this year, the Federal Reserve cut its benchmark Fed Funds Rate by 0.25%, bringing it down to a target range of 4% to 4.25%. The move was widely expected, as the Fed tries to balance persistent inflation with growing concerns about a weakening job market.
Fed Chair Jerome Powell summed it up well, saying there is “no risk-free path” forward – meaning the Fed is trying to avoid hurting the economy while still keeping inflation under control.
That uncertainty is reflected in the Fed’s own projections. Of the 19 oƯicials, seven expect no additional cuts this year (with one even projecting a hike), two expect one more quarterpoint cut, nine expect two more, and one is calling for five.
Now, you may be wondering: If the Fed cut rates, why did mortgage rates tick up?
Here’s why: markets often move in advance of big announcements. In this case, mortgage rates had already dropped sharply since August 22, when Powell first signaled this rate cut. When the cut finally happened, markets had already “priced it in,” and some investors even sold off in response – a classic “sell the news” reaction.
And remember: the Fed Funds Rate isn’t the same as mortgage rates, but it does influence them over time.
In housing news, construction activity slowed in August, and builder sentiment remains low. But there’s a silver lining: many builders are optimistic that lower rates could bring more buyers back into the market by year-end.
Have questions about buying, refinancing, or the market? I’d be happy to help. Reach out any time.
