What does it mean to reduce the federal reserve rate for us

The Federal Reserve reduced its record price for the first time in nine months on Wednesday, which led to a quarter of a point, and most experts expect.

While this is the news that the home buyers in the United States were stumbling due to the high borrowing costs, they may not be translated into the convenience, the analysts said. NewsweekSince the mortgage rates have already decreased in anticipation of the central bank’s decision.

“The bond market has already baked this,” said Melissa Cohen, Vice President of William Ravis Real Estate Company and a fighter in the mortgage industry for 43 years. Newsweek. “We are now returning to monitoring data for the direction of mortgage rates for the rest of the month.”

How will mortgage rates interact with the Federal Reserve Decision?

Mortgage rates are not directly related to the rate of federal funds. Instead, they tend to follow the treasury return path for a period of 10 years, which is affected by the decisions to reduce the Federal Reserve.

Recently, the average fixed mortgage rate has decreased for 30 years in anticipation of the large -scale federal reserve rate to reduce the lowest level in months. As of September 11, it was 6.35 percent, for all Freddy Mac data.

According to the Bankate Financial Stephen Kates analyst, it is not possible to reduce the Federal Reserve “itself” to pay the mortgage rates in Lockstep with change.

He said: “While the Federal Reserve Policy decisions affect the mortgage rates, other factors such as inflation expectations, investors demanded securities backed by mortgage, and the total economic conditions often play a greater role in determining the position of mortgage.” “It is possible that the expectations of the Federal Reserve on future policy will have a greater impact on mortgage rates than this particular reduction.”

“I think the mortgage rates may be somewhat less and you are likely to do this this week,” said Daniel Heil, the chief economist in RealTor.com. Newsweek. “After this week, I see them continuing to hover in a 6 percent low range, but I do not see much additional landing momentum, and I will not rule out the possibility of a moderate increase after this meeting.”

Hill said that the mortgage rates have already decreased by nearly 70 basis points from the height of 2025, and approximately 150 basis points of peak 2023 decreased. She added that any other declining movement will create “re -financing opportunities for those who bought homes in these peak periods, and it creates the ability to bear costs for these periods and increases the power to buy those who look forward to buying a house.”

“This demand for housing can improve, and boost home sales and opportunities for both buyers and sellers. One card is the labor market, which also plays an important role in the demand for housing. I expect income to grow, but as the labor market is cooled, follow the labor market, and soon highlights income growth and more anxiety about job stability, Haley continued. “Haley.

What does this mean for home owners?

Experts said Newsweek This reduction in the individual price is not expected to transfer the housing market significantly, so that it can provide some comfort to the home buyers.

“Decreased mortgage rates can provide some relief, but it is unlikely to address the ability to completely tolerate costs,” said Daril Veroyeth, chief economist in Redvin. Newsweek.

She said: “Even with 5.5 percent rates, housing costs may not return to” normal “levels until 2027 or later, depending on the growth and income of home prices. In addition, the model American family still earns about $ 25,000 of the need to honor the medium house prices, highlighting the continuous capacity gap to afford costs.”

“The low rates may make home purchases more attractive to some buyers, but given that the prices of home remain high, it may not be sufficient to stir a wide return in the purchase activity,” Kits said.

However, he added: “The price decrease from January to this day has started opening opportunities for some current homeowners to re -financing, especially those that have higher mortgage rates.”

What comes after that

Chen Zhao, head of economic research at Redvin, believes that the future is not certain when it comes to what the Federal Reserve will do during its upcoming meetings in the coming months. In a joint statement with NewsweekShe said that the decision on Wednesday from the Federal Reserve indicates “uncertainty more than just a clear way towards mitigation.”

According to Fairweather, it is unlikely that prices will continue to decline this year significantly. She said: “With the reduction of the 25 -point point is already expected, there seem to be other important low declines,” she said.

When it comes to mortgage rates, I told Yuval Golan, CEO and founder of the Waltz real estate financing platform, Newsweek In a statement, “We will need to wait and see how mortgage rates respond” to the federal reserve decision. “They have already decreased in recent months, and this may lead to more cuts,” he said.

He added: “I do not expect real estate mortgage rates to decrease in the rest of 2025. We have already seen a significant decrease this year, which reflects the market expectations for the Federal Reserve Discounts in the future, less in the long run, and weakening economic expectations.”

Nadia Evanjelo, the National Association of Economists and Director of Real Estate Research, said, ” Newsweek It expects mortgage rates to decrease to 6 percent soon.

She said: “A year ago, after the reduction, the prices fell and then rapidly rose because the economy was still very hot. Unlike last year, it is possible that the labor market will remain softening at the high mortgage rates for a longer period, instead of getting rid of them as they did after last year reduction. Pricing prices can rise reasonably to 6 percent, providing more support for costs.”

She said that the move about 6 percent of mortgage rates would enhance the ability to afford the costs in the American housing market.

“Based on the modern analysis, we expect that 5.5 million other families can buy a house if the rates decrease to this level, which may translate into an increase of 3 percent in sales in 2025 and a 14 percent jump in 2026,” said Evangeo. She added: “All this means, if prices reach 6 percent, we expect to buy 10 percent of these newly qualified families during the next 12 to 18 months.”

But low prices alone cannot fix the crisis of the ability to afford American housing, which were mostly driven by supply issues. “We also need more supply, especially at the price points where the demand is stronger. Otherwise, buyers will continue to face intense competition,” said Evanjelo.

In fact, stock levels rise throughout the country, with 1.55 million units of current homes now on the market, according to the NAR – higher since 2020.

“This mixture of the greatest purchase force and more supply signals that buyers will not have for the first time, but also sellers, with more flexibility,” said Evangelo. “With the return of mobility to the market, sellers who have been closed at higher rates may be able to insert their current home and carry a new home.”