Could U.S. Interest Rate Cut Boost the Housing Market?

Aileen Barrameda is planning to buy a house in Los Angeles in the coming months. Stubbornly high mortgage rates—twice what she locked in at the start of the coronavirus pandemic—aren’t putting her off.

The average 30-year fixed mortgage rate fell to 6.35% last week,

“If I have the means to get in the market, I might as well get in now, because homes are just going to get more expensive,” she told BBC News.

Housing costs remain a key concern for Americans and a major political issue. President Donald Trump raised hopes that Federal Reserve interest rate cuts would help ease mortgage costs.

The average 30-year fixed mortgage rate fell to 6.35% last week, according to Freddie Mac—the sharpest weekly drop in a year and the lowest level in 11 months. Still, for buyers like Barrameda, borrowing costs may not decline much further despite Wednesday’s Fed cut.

Fed decisions don’t directly determine mortgage rates, but they influence what banks charge each other, which in turn affects loans and savings rates for consumers.

Analysts note that many U.S. banks had already adjusted mortgage rates in anticipation of the Fed’s move, meaning further decreases may be limited.