Fed meeting in September: Will mortgage rates drop?

The Federal Reserve is anticipated to lower interest rates at its upcoming meeting on September 17 and 18, with many economists predicting a reduction of 25 basis points from the current 5.25% to 5.50% range. This expectation is based on recent inflation data and employment trends, which have led to a consensus among rate watchers that a rate cut is imminent. Mortgage lenders are already adjusting their rates in anticipation of this decision, indicating that some of the expected decline in mortgage rates has already occurred. Experts like Dr. Selma Hepp from CoreLogic emphasize that while a rate cut is likely, the extent and frequency of future cuts will depend on ongoing economic indicators, particularly in the job market. If employment continues to cool, the Fed may adopt a more aggressive approach to rate cuts, potentially leading to a more significant drop in mortgage rates. Currently, mortgage rates are expected to remain in the mid-6% range, but the situation could change if the job market softens more than anticipated. Jeremy Schachter from Fairway Independent Mortgage Corporation believes that mortgage rates have peaked for 2024 and will gradually decline, influenced by cooling inflation and other economic factors. For potential homebuyers, the current market presents an opportunity to purchase homes with less competition. While many are waiting for rates to drop further, entering the market now could improve their chances of securing a desirable property before competition and prices rise.