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How a Fed rate cut could affect the real estate market



The Federal Reserve will hold a two-day meeting this week, with the central bank likely to announce a further cut in its key interest rate.

This could be good news for potential homebuyers.

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While the Fed does not control mortgage rates, it sets the federal funds rate it can influence.

When the Fed cuts rates as expected by 25 basis points The real estate market may not be overly strong.

"If the Fed makes the quarter-point cut, I do not expect any significant change in mortgage rates," said Lawrence Yun, chief economist of the National Association of Realtors, to FOX Business.

However, if the Fed cut interest rates by 50 basis points, Yun's interest rate could go down, which would benefit both consumers and homebuyers.

Yun previously predicted the 30-month interest rate. Fixed mortgage rates could fall to 3.3 percent b at the end of the year.

A weaker-than-expected employment report in August added to the predictions that the Fed will lower interest rates on Wednesday when it makes its statement. The US economy created 1

30,000 new jobs last month, falling below expectations of 158,000. The figure also reflected the recruitment of temporary workers.

The US is also involved in a continuing trade war with China, which has created uncertainty over domestic and global economic growth.

And geopolitical stability took center stage the following weekend An attack on Saudi oil facilities that disrupted more than 5 percent of world oil supplies.

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President Trump has pressured the Fed to cut interest rates again on Monday.

Despite lower mortgage rates, buyers were still largely reluctant to buy. However, they are showing interest as mortgage applications rose 2 percent in the week ending September 6, according to the Mortgage Bankers Association.


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