Your Money Minute Don't Wait For Fed Cuts To See Lower Mortgage Rates 9/3/25
Sep 3, 2025
Discover the intriguing link between Federal Reserve interest rates and mortgage rates. The discussion highlights why expecting short-term cuts to yield immediate reductions in long-term mortgage rates could lead to disappointment. It urges potential homebuyers to shift their expectations and make informed decisions despite fluctuating rates. Tune in for insights that could reshape your understanding of home financing!
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Fed Cuts Don't Ensure Lower Mortgages
- The Fed cutting short-term rates doesn't guarantee lower long-term mortgage rates.
- Long-term rates can rise even after Fed cuts, so cuts aren't a direct path to cheaper 30-year mortgages.
Jason Furman's Real-World Example
- Harvard economist Jason Furman pointed out that after the Fed cut in September 2024, mortgage rates actually rose.
- He used that event as an example to caution homebuyers against assuming cuts mean immediate mortgage relief.
Short-Term Fed Control Versus Long-Term Yields
- The Federal Reserve controls short-term rates while mortgages reflect long-term yields and investor demand.
- Global aversion to long-duration assets can keep long rates elevated independent of Fed policy.