If the Fed cuts rates in September, it doesn’t guarantee mortgage rates will move lower. This is a conversation I’ve had with many of my clients. With a strong economy and low unemployment, mortgage rates may stay put. Yes, a Fed rate cut usually puts some downward pressure on borrowing costs, but it’s not guaranteed. Mortgage rates move more closely with bond yields, which are heavily influenced by inflation expectations and overall economic strength. If investors still see inflation risk or the labor market looks too strong, those yields (and mortgage rates) won’t budge much, even if the Fed is cutting.

We saw this last fall, and it could happen again. On a brighter note, homes are more affordable today than they were in April. Here’s the math:

Even though home prices rose by $15,000 since April, the lower mortgage rate improves affordability. A buyer today pays about $200 less per month compared to April, despite the higher purchase price - that’s an annual savings of roughly $2,400 in mortgage payments.