Additional Coverage:
- America’s prospective homebuyers absorb harsh reality: Mortgage rates probably aren’t coming down for a while (nbcnews.com)
Mortgage Rates to Remain High Despite Federal Reserve Cuts
Americans hoping for lower mortgage rates may be disappointed, as experts predict rates will remain above 6% for the foreseeable future. The combination of strong economic growth and uncertainty surrounding President Trump’s economic policies is keeping rates elevated.
The Federal Reserve’s recent rate cuts have benefited short-term borrowers like corporations and credit card users, but have not significantly impacted mortgage rates. Mortgage rates are more closely tied to demand for government bonds, which has been weak due to strong economic growth.
Trump’s Policies May Fuel Interest Rates
Trump’s proposed tariffs and tax cuts could have conflicting effects on mortgage rates. Tariffs may reignite inflation, pushing rates higher. Tax cuts could also increase demand and inflation, potentially raising rates.
Impact on Housing Market
The high mortgage rates have slowed the housing market, particularly sales of existing homes. Existing homeowners are reluctant to give up their low rates, creating a “lock-in” effect.
Glimmer of Hope for Buyers
Slowly increasing housing supply and cooling home-price growth offer some hope for potential buyers. However, inventory varies regionally, and the trend has recently slowed.
Demographic Shift May Create More Balance
As baby boomers age and leave the housing market, demand may decline. This could lead to more balanced market conditions and less rapid home price appreciation.