Summary
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.
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