Why Jerome Powell’s Rate Cut Still Doesn’t Mean Cheaper Mortgages 🏠📉
$WILD
When people hear “the Fed cut rates,” they instantly think mortgage rates are about to drop. Unfortunately, it doesn’t work that way.
Mortgage rates don’t move with the Fed’s short-term rate 🚫. They’re tied to long-term Treasury yields, inflation expectations, and how risky lenders think the future economy looks. If inflation refuses to cool, government debt keeps climbing, and investors want higher returns, mortgage rates stay high—rate cut or not.
There’s also the timing issue ⏰. Banks and lenders usually price in expected Fed moves well in advance. By the time Powell announces a cut, markets have already adjusted. In fact, if investors were hoping for bigger or faster cuts and didn’t get them, long-term rates can actually rise after a “rate cut” 📈.
Another key point: the Fed is cutting because economic growth is slowing, not because everything is suddenly strong 💼⚠️. Slower growth raises fears about job losses, loan defaults, and credit risk. To protect themselves, lenders keep mortgage rates elevated.
The bottom line 🔑:
A Fed rate cut helps banks borrow overnight—it doesn’t magically lower your 30-year mortgage. Until inflation clearly cools and long-term bond yields fall, mortgage rates aren’t coming down in a way that truly helps homebuyers. 🏡💸
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