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Mortgage Rates Fell, Then Rose. What Comes Next?

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Many would-be home buyers are still hoping for mortgage rates to come down as the Federal Reserve cuts interest rates. How much they will fall is unclear.Rafael Corrales, a real estate agent in Miami, recently showed houses to a young couple hoping to move from a rental into a home. They had been lured to the market after hearing that mortgage rates had come down.But when the couple went to get approved for a home loan, they found that the borrowing costs had ticked up once again.“They were very confused,” said Mr. Corrales, 49, an agent for Redfin. It pushed them back onto the sidelines of the housing market, and they’re now staying put in the hope that rates will fall again.Mortgage rates fell steadily from this spring through September, as economic data slowed and as investors began to expect a steady string of interest rate cuts from the Federal Reserve. But the rate on a 30-year mortgage has reversed course and climbed sharply over the past month to 6.79 percent nationally, from about 6.1 percent at the start of October.The move has come as a shock to some home buyers, who had waited many months for Fed officials to begin lowering borrowing costs, hoping that they would bring relief to the mortgage market.The logic was fairly simple. When the Fed lowers its benchmark interest rates, the downward shifts tend to trickle through financial markets to lower other interest rates. While the biggest impact is on short-term rates, the effect can extend to 10-year Treasury notes, which mortgages closely track. And the Fed is, in fact, adjusting policy. Officials cut interest rates for the first time in four years in September, and they followed with a quarter-point rate cut on Thursday.

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U.S. average 30-year fixed-rate mortgage
Source: Freddie MacBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Officials Debated Whether a Big Rate Cut Was Smart in September

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    For the Fed, a Sign That the Job Market Is Cooling but Not Cracking

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    30-Year Home Mortgage Rate Falls to 6.47%

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    Wall Street was jolted by rising economic uncertainty on Friday, and stocks skidded, capping off a turbulent week with a sharp decline.Friday’s drop followed a report on U.S. hiring in July that was far weaker than expected, startling investors into worrying that the Federal Reserve has been too slow to cut interest rates. Traders were already growing uneasy about the state of the economy, as well as the prospects for the big technology stocks that had underpinned a market rally for much of the year, but the jobs report intensified the focus on the risks.The S&P 500 fell 1.8 percent, while the tech-heavy Nasdaq dropped 2.4 percent. Small stocks, yields on government bonds, and oil prices, all of which are sensitive to expectations for the economy, dropped too.Employers in the U.S. added 114,000 jobs in July, on a seasonally adjusted basis, much fewer than economists had expected and a significant drop from the average of 215,000 jobs added over the previous 12 months, the Labor Department said. The unemployment rate rose to 4.3 percent, the highest level since October 2021.“That all-important macro data we have been hammering for months is finally starting to turn in an ominous direction,” said Alex McGrath, chief investment officer at NorthEnd Private Wealth.Investors are reassessing how aggressive the Fed may have to be as it starts to cut interest rates — if weakening economic conditions justify a bigger rate cut than the central bank has indicated so far. The central bank raised rates to a two-decade high as it tried to wrestle inflation under control, but policymakers now have to decide when to cut, and by how much, in order to forestall a recession.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More