The anticipation leading up to the Federal Reserve’s decision on interest rates has everyone on edge, wondering how it will impact mortgage rates. While a Fed rate cut may not necessarily translate to lower mortgage rates, the events surrounding the announcement can still shake up the market in unexpected ways. Here’s a breakdown of what to expect in the coming days:
- Reflection of Future Expectations: The recent decline in mortgage rates is largely attributed to the market’s anticipation of lower Fed Funds Rates. This means that much of the potential impact of a rate cut has already been factored into current mortgage rates.
- Market Volatility: The uncertainty surrounding the Fed’s decision, particularly whether they will cut rates by 0.25% or 0.50%, can lead to significant fluctuations in the market. Half of the market will be caught off guard either way, creating a recipe for volatility.
- Release of Documents: Alongside the rate announcement, other documents are released that can influence long-term interest rates. These releases, coupled with Fed Chair Powell’s press conference, can further sway rates in one direction or another.
- Fluctuations: Wednesday is expected to see a series of back-and-forth movements as the market reacts to the Fed’s decision and related events. While volatility may extend into Thursday, the true impact on mortgage rates for the week will depend on upcoming economic data in early October.
As we close out this week, rates have remained relatively stable with lenders hovering just above the lowest levels seen since February 2023. While the Fed’s decision may not bring about significant changes in mortgage rates immediately, the overall economic landscape will play a crucial role in shaping future developments. Stay informed and be prepared for potential movements as the week progresses.
