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Why Fed Rate Cuts Aren’t Making Mortgages Cheaper

Federal Reserve interest rate decision can affect the cost of mortgages. But that link from the Fed to your monthly payment isn’t direct. Fed decisions affect the investors demand for debt products like treasury bills and mortgage-backed securities. The shifting demand will, in turn, affect the rates Americans pay for new mortgages. Meanwhile, the Fed is reducing its holdings of debt, which it accrued during recent economic emergencies. That reduction in the Fed's assets, particularly mortgage-backed securities holdings, could keep upward pressure on mortgage rates. The upward pressure may keep rates elevated even as the Fed reduces the federal funds rate heading into 2025. Chapters: 01:13 Chapter 1 - Mortgage rates 04:08 Chapter 2 - Treasury yields 05:56 Chapter 3 - Quantitative tightening 07:43 Chapter 4 - The outlook Produced, Shot and Edited by: Carlos Waters Additional Camera: Nathaniel Lee, Charlotte Morabito Senior Producer: Shawn Baldwin Graphics: Christina Locopo Additional footage: Federal Reserve, Getty Images Additional sources: BNL Appraisal, The Brookings Institution, Federal Housing Finance Agency, Federal Reserve Bank of Dallas, Federal Reserve Bank of Kansas City, Federal Reserve Bank of St. Louis, ICE Mortgage Technology, Mortgage Bankers Association, Peter G. Peterson Foundation, SmartAsset
Wed, 18 Dec 2024 17:15:26 GMT

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