The Federal Reserve’s decision to keep its target interest rate steady may not necessarily mean mortgage rates will follow suit, according to experts. Instead, what could drive a significant decrease in mortgage rates is economic data and market outlook in the coming months.
The Fed’s announcement on Wednesday was seen as a bullish sign for the economy, but it does not guarantee that borrowing costs will remain low. The real driver of mortgage rate movements is what happens in the months leading up to the September meeting, when the Fed reviews its monetary policy strategy.
Economic indicators such as inflation rates, employment numbers, and GDP growth could all impact the Fed’s decision-making process. If the economy continues to show signs of strength, the Fed may be more likely to lower interest rates, which would put downward pressure on mortgage rates.
The market outlook is also crucial, with some analysts predicting a sharp decline in long-term bond yields, which are closely tied to mortgage rates. This would make borrowing cheaper for homebuyers and refinancees.
In contrast, if economic data weakens or the market becomes increasingly uncertain, mortgage rates could tick up due to higher borrowing costs. The Fed’s decision may be seen as a pre-emptive move to avoid increasing rates in response to future economic downturns.
Ultimately, the key factor that drives mortgage rate movements is not just the Fed’s actions but also what happens on the ground in the real economy. As such, investors and policymakers will be closely watching economic data and market trends leading up to the September meeting for signs of a potential shift in borrowing costs.
Source: https://www.barrons.com/articles/mortgage-rates-fed-treasuries-home-housing-97d60736