Once again, Fed leaves rates unchanged
What happened:
The June meeting of the Federal Open Market Committee (FOMC) culminated in the Fed leaving interest rates unchanged for the seventh straight meeting in a row. This maintains the existing 5.25% to 5.5% rates that have been holding steady for the last several months.
At a national press conference, Fed Chairman Jerome Powell said, “Inflation has eased from a peak of 7% to 2.7%, but is still too high. We are strongly committed to returning inflation to our 2% goal in support of a strong economy that benefits everyone.”
What it means:
As this is the seventh time the Fed has held firm on rates, it comes as no surprise to both industry experts and economists alike. It should be noted that this decision does come just hours after a better-than-expected report on inflation. Since battling inflation has been the Fed's stated goal for standing pat on interest rates during this time, it makes sense that this news might eventually factor into their long-term thinking — just not this time.
While it has been speculated that the Fed would announce two interest rate cuts later in the year, this has now been downgraded to only one, with a tentative target date of September. In reaction to the news, the Dow fell 14 points — a sharp contrast to the 400-point surge that markets enjoyed as a result of the Fed's report in May.
How this affects homeownership:
For the time being, rates holding steady will preserve the status quo of that facet of the housing industry, though other aspects, such as available inventory in many areas, have been trending positively in recent weeks. There's no denying that this announcement is less-than-optimal news for potential homebuyers looking to take advantage of the summer selling season.
A potential rate decrease in September could see the coming autumn turning out to be a home-hunting bonanza in a time when housing markets tend to diminish in the lead-up to winter. This also opens up some interesting possibilities for homebuyers in the form of refinancing or extended rate-lock options as summer comes to a close.
Of course, interest and mortgage rates don't share a precise 1:1 correlation with each other. Should the Fed hold to their new estimate of a rate cut in September, it will likely benefit homebuyers looking to get the best deal possible. If, for some reason, that doesn't happen, homebuyers should take solace in the well-known axiom that they should "date the rate, but marry the house." After all, homeownership should be seen as a marathon, not a sprint.
With that in mind, working with a loan officer is one of the best ways to navigate the often-uncertain seas of the mortgage industry. So, if you're ready to embark upon your own personal journey toward homeownership, we recommend taking the first step and seeking pre-approval status to get you well on your way to a place of your own.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
