T
he Federal Reserve's decision to lower its key benchmark rate by 50 basis points may not have a significant immediate impact on mortgage rates. According to Lawrence Yun, Chief Economist at the National Association of REALTORS®, borrowing costs have already factored in the Fed's policy trajectory.

    The Fed's rate cut is seen as the first step towards potentially moving mortgage rates lower, but its influence is indirect and limited. Mortgage rates may have already dropped in anticipation of the Fed's decision, with the 30-year fixed-rate mortgage averaging 6.2% last week, down from 7.18% a year earlier.

    While some home buyers may be holding out for even lower mortgage rates, economists predict that any further decline will be minimal. The Fed does not directly control mortgage rates, and large federal borrowing will leave less capital available for mortgage lending. However, every drop in interest rates can help release pent-up housing demand, motivating more prospective buyers to make their move.

    Lower mortgage rates have already improved the purchasing power of many home buyers, equating to about $50,000 in savings for those with a $2,000 monthly mortgage payment. Further rate cuts could get even more home buyers off the sidelines, particularly first-time buyers and those in lower income brackets who are disproportionately affected by interest rates.

    Lower rates can indirectly benefit sellers as well, increasing buyers' purchasing power and options. Real estate agents should communicate the urgency for their clients to buy or sell as soon as possible, given the advantages of owning or selling real estate.