Interest rate cuts are on the horizon, but high mortgage rates could be here to stay

foxbusiness.com:

UBS Private Wealth Management managing director Alli McCartney explains how the Fed's messaging could affect the market on 'Making Money.'

The Federal Reserve laid the groundwork for a September interest rate cut at the conclusion of its two-day meeting Wednesday, but the much-anticipated reduction may offer little relief to Americans squeezed by higher borrowing costs.

Fed Chair Jerome Powell told reporters at a press conference after the central bank voted to hold rates steady at a two-decade high that a September rate cut could be «on the table» if inflation continues to cool.

«We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,» Powell said, «but we’re not quite at that point.»

Even then, rates are unlikely to come down enough to provide any real reprieve to would-be homebuyers who have seen a key tenet of the American dream slip away due to astronomically high mortgage rates.

THE US HOUSING MARKET IS 'STUCK,' AND MIGHT REMAIN THAT WAY UNTIL 2026

Federal Reserve Chair Jerome Powell speaks at a news conference following a Federal Open Market Committee meeting on July 31, 2024, in Washington, D.C. (Photo by Andrew Harnik/Getty Images / Getty Images)

The «announcement doesn’t change the outlook for the year when it comes to mortgage rates,» said Afifa Saburi, capital markets analyst at Veterans United Home Loans. Saburi noted that if the Fed delivers fewer cuts than investors currently expect, there could even be a «slight pull back» in mortgage rates.

«If that happens, the range we have seen this year for rates will remain intact,» she said. «Potential savings are low for a prospective homebuyer hoping for rate improvement this year.»

HOME PRICES JUST SET ANOTHER RECORD HIGH AS