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How the Fed rate cut can affect the housing market



This week, the Federal Reserve will hold a two-day policy meeting, at which the central bank is expected to announce another reduction in the base rate.

This may bring some good news for future homebuyers.

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While the Fed does not control mortgage rates, it determines the percentage of federal funds that can affect them.

If the Fed lowers the reference rate by 25 basis points – as expected – it may not have a significant impact on the housing market.

"If the Fed cuts a quarter, I do not expect a significant mortgage rate move," Lawrence Yun, chief economist at the National Association of Brokers, told FOX.

However, if the Fed cut its interest rate by 50 basis points, Yun said it could lead to a reduction in the mortgage rate, which would be good for consumers and homebuyers.

Yun previously predicted a 30-year fixed mortgage rate could drop to 3.3% b at the end of the year.

The lower-than-expected job report in August contributed to forecasts that the Fed would cut interest rates on Wednesday when it issued its statement. The US economy added 1

30,000 jobs last month, below expectations of 158,000. The number also reflects the hiring of temporary workers.

The United States is also imprisoned in a continuing trade war with China, which has created uncertainty for both domestic and global economic growth.

And geopolitical stability emphasized over the weekend then the attack on oil facilities in Saudi Arabia, which cut off more than 5 percent of world oil supplies.

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President Trump is pressing the Fed to cut interest rates, doing it again on Monday.

Despite low mortgage rates, buyers are still hesitant to make purchases. However, they are showing interest as mortgage applications increased by 2 percent for the week ending September 6, according to the Mortgage Bankers Association.


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