Why a Fed Rate Cut on Sept. 17 Will Not Lower Mortgage Rates this Week

A Fed rate cut is almost a certainty this week. However, there are no expectations that we will see mortgage rates improve on Wednesday afternoon, as the Fed cut is already factored into mortgage rates. The market’s anticipation of the Fed rate cut is the reason that 30-year fixed-rate mortgage rates have come down almost one percent in the last six weeks.

Instead, the primary focus will be on what the Fed says on Wednesday to provide forward guidance to the market. If the Fed signals additional rate cuts are likely before the end of the year, we could see mortgage rates continue to improve over the next few months. If they revert to a cautious wait-and-see approach, uncertainty will dominate trading.

At the last Fed meeting, they noted, “Uncertainty about the economic outlook remains elevated.” A rewording of their position could signal the path to lower rates over the months ahead.