The Fed’s decision followed President-elect Donald Trump’s recent re-election, with voters expressing ongoing concerns about inflation and economic stability. While the cut aims to stabilize borrowing conditions, housing industry experts said that the immediate impact on mortgage rates may be limited due to other factors, including market volatility post-election.
Mixed reactions on mortgage rate impact
Market activity in response to the election has driven long-term rates higher, according to the Mortgage Bankers Association (MBA).
“The big impact on rates this week was clearly the election,” said MBA chief economist Mike Fratantoni. “As results rolled in, longer-term rates jumped higher. Investors expect somewhat stronger economic growth, higher inflation, and larger deficits.”
As investors processed election results, expectations of stronger economic growth, higher inflation, and larger deficits pushed longer-term rates upward.
“MBA expects that mortgage rates will remain within a fairly narrow range over the next year, with mortgage rates moving higher on signs of economic strength and more stimulative fiscal or monetary policy, or lower if it’s the opposite,” Fratantoni added. “Housing markets continue to be primed for a stronger spring homebuying season, boosted by more housing supply and slower home-price growth.”
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