Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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M0RTGAGE RATES: WHY HAVEN’T THEY FALLEN?
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The Federal Reserve's recent interest rate cuts have left many homebuyers and homeowners puzzled - why haven't mortgage rates fallen as expected? The disconnect between the Fed's actions and the trajectory of mortgage rates reflects the inherent complexity of mortgage pricing, which is influenced by a multitude of factors beyond just the central bank's decisions. I will delve into the intricate dynamics that shape the mortgage market, and offer insights that can help you navigate the current landscape and make informed decisions about your home financing.
The Fed's Rate Cuts and Mortgage Rates
When the Federal Reserve announced its interest rate cuts in September, many anticipated a corresponding drop in mortgage rates. However, the reality has been quite different. Contrary to popular belief, mortgage rates are not directly tied to the Fed's benchmark rate. Instead, they are more closely aligned with the performance of long-term Treasury bonds, which reflect investors' expectations about future economic growth and inflation.
The Disconnect Between Fed Rates and Mortgage Rates
The Federal Reserve's primary tool for influencing the economy is its ability to adjust short-term interest rates. These adjustments, in turn, impact the cost of borrowing for consumers and businesses. However, mortgage rates are more closely tied to the yield on 10-year Treasury bonds, which are influenced by a broader range of factors, including investor sentiment and economic forecasts.
The Impact of Investor Sentiment
As the Wall Street Journal noted, the disconnect between the Fed's rate cuts and mortgage rates reflects the "complexity" of mortgage pricing. Mortgage rates are heavily influenced by investor sentiment and their expectations about the future direction of the economy. When investors anticipate stronger economic growth, they often demand higher yields on long-term Treasuries, which in turn puts upward pressure on mortgage rates.
Want to learn more about mortgage rates? Call me anytime. I will be happy to send you my full article that explains all in detail! Call me! Judy: 908 803 0472
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Judy@JudithSutton.com
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