Interest rates are going down. But mortgage rates are going ... up?

[Zorro]

Interest rates are going down — but aspiring homeowners waiting for lower mortgage rates aren’t feeling relief.

For years, wannabe buyers have waited for the Federal Reserve to lower rates after the central bank pushed them to the highest level in decades. People who bought houses at high rates are also eager for borrowing costs to simmer down so they can refinance and get lower payments.

Yet the Fed’s move to start cutting rates has not sent mortgage costs down. Instead, the 30-year fixed-rate mortgage has ticked up for the last five weeks, clocking in at 6.72 percent at the end of October, according to the mortgage-finance company Freddie Mac. That’s higher than when rates were slightly above 6 percent around the Fed’s last meeting in September.

“We’re waiting for the shoe to drop, and it’s just not dropping,” said Mike Kemp, who bought his roughly $700,000 home last November and is eager to refinance his 7.25 percent mortgage.

https://www.washingtonpost.com/business/2024/11/05/fed-mortgage-rates-housing/

[RustyWheels]

1. Patience....

Banks/Lenders have been originating mortgages at "below-cost" margins since the rates spiked up a couple of years ago.

And so, the first couple of rate reductions by the Fed won't have much impact on mortgage rates to consumers, as the banks/lenders get back to originating at a profit.

It is going to take a couple of rate reductions by the Fed before consumers will see any significant lowering of the mortgage rates being offered.

[IbogaProject]

2. Dicey time as the default risk has increased

Real Estate is currently over valued so the default risk is significant. It will take awhile for this to straighten out.