Why mortgage rates are still high after a Fed cut — and likely won't go down anytime soon
America’s prospective homebuyers absorb harsh reality: Mortgage rates probably aren’t coming down for a while.
Many Americans have been holding back from jumping into the housing market in the hopes that mortgage rates will decline. So far, they haven’t.
The average 30-year mortgage rate has been above 6% for two years — and is likely to stay above that level for the foreseeable future, experts say.
A combination of better-than-expected growth and uncertainty about the impact of President-elect Donald Trump’s economic proposals, especially on inflation and the deficit, are combining to keep rates elevated. That’s despite the Federal Reserve’s push to lower its key federal funds rate to make borrowing in the economy easier.
“Sixes are the new normal,” said Lisa Sturtevant, chief economist at Bright MLS, a mortgage listing services group, referring to 6% mortgage rates.
Interest rates in general have been on the decline. On Thursday, the Federal Reserve announced it was lowering its key federal funds interest rate by a quarter point against a backdrop of relatively cooler inflation and a moderating jobs market. In September, the Fed cut the rate by half a percentage point.
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