Now that it’s September, all eyes are on the Federal Reserve (the Fed). The overwhelming expectation is that they’ll cut the Federal Funds Rate at their upcoming meeting, driven primarily by recent signs that inflation is cooling, and the job market is slowing down. Mark Zandi, Chief Economist at Moody’s Analytics, said:

“They’re ready to cut, just as long as we don’t get an inflation surprise between now and September, which we won’t.”

But what does this mean for the housing market, and more importantly, for you as a potential homebuyer or seller?

Why a Federal Funds Rate Cut Matters

The Federal Funds Rate is one of the key factors that influences mortgage rates – things like the economy, geopolitical uncertainty, and more also have an impact.

When the Fed cuts the Federal Funds Rate, it signals what’s happening in the broader economy, and mortgage rates tend to respond. While a single rate cut might not lead to a dramatic drop in mortgage rates, it could contribute to the gradual decline that’s already happening.

As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), points out:

“Once the Fed kicks off a rate-cutting cycle, we do expect that mortgage rates will move somewhat lower.”

And any upcoming Federal Funds Rate cut likely won’t be a one-time event. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:

“Generally, the rate-cutting cycle is not one-and-done. Six to eight rounds of rate cuts all through 2025 look likely.”

The Projected Impact on Mortgage Rates

Here’s what experts in the industry project for mortgage rates through 2025. One contributing factor to this ongoing gradual decline is the anticipated cuts from the Fed. The graph below shows the latest forecasts from Fannie Mae, MBA, NAR, and Wells Fargo (see graph below):

So, with recent improvements in inflation and signs of a cooling job market, a Federal Funds Rate cut is likely to lead to a moderate decline in mortgage rates (shown in the dotted lines). Here are two big reasons why that’s good news for both buyers and sellers:

1. It Helps Alleviate the Lock-In Effect

For current homeowners, lower mortgage rates could help ease the lock-in effect. That’s where people feel stuck within their current home because today’s rates are higher than what they locked in when they bought their current house.

If the fear of losing your low-rate mortgage and facing higher costs has kept you out of the market, a slight reduction in rates could make selling a bit more attractive again. However, this isn’t expected to bring a flood of sellers to the market, as many homeowners may still be cautious about giving up their existing mortgage rate.

2. It Should Boost Buyer Activity

For potential homebuyers, any drop in mortgage rates will provide a more inviting housing market. Lower mortgage rates can reduce the overall cost of homeownership, making it more feasible for you if you’ve been waiting to make a move.

What Should You Do?

While a Federal Funds Rate cut is not expected to lead to drastically lower mortgage rates, it will likely contribute to the gradual decrease that’s already happening.

And while the anticipated rate cut represents a positive shift for the future of the housing market, it’s important to consider your options right now. Jacob Channel, Senior Economist at LendingTree, sums it up well:

“Timing the market is basically impossible. If you’re always waiting for perfect market conditions, you’re going to be waiting forever. Buy now only if it’s a good idea for you.”

Bottom Line

The expected Federal Funds Rate cut, driven by improving inflation and slower job growth, is likely to have a positive, albeit gradual, impact on mortgage rates. That could help unlock opportunities for you. When you’re ready, connect with a local real estate agent so you’re prepared to take action.

Selecting the right real estate agent can make a world of difference when buying or selling a home. But how do you find the best one? Here are some tips to help you make that big decision as you determine your partner in the process.

Check Their Reputation

Start by gathering information about agents in your area. From there, try to narrow down the list. Ask the people you trust if they have someone they’d recommend. You’ll want to find an agent with a strong online presence, plenty of positive reviews, and someone whose great reputation truly precedes them. As Freddie Mac explains:

“. . . you may want to look for a real estate agent who specializes in the type of home you’re searching for. For example, if you are looking for an energy-efficient home, look for an agent who has experience with finding and negotiating offers for those homes. If you are looking for new construction, you’ll want to find an agent who has experience with new construction and isn’t affiliated with the builder . . .”

Look for Local Market Expertise

A great agent should have in-depth knowledge of what’s happening at the national and local level. That way they can clear up any misconceptions sparked by what you’re reading or hearing in the news. And they can tell you how your area compares to the national data. As an added perk, they’ll also be familiar with the neighborhoods you’re interested in and community amenities. As a recent article from Business Insider says:

“Spend some time talking with prospective agents about the local real estate market and how it could impact your purchase or sale. You want to get an understanding of how knowledgeable they are about local market conditions. Whether they’re helping you sell or buy, their strategy for you should account for those conditions.”

Get a Feel for Their Communication Style and Availability

Effective communication is key in real estate transactions. Choose an agent who listens to your needs, answers your questions quickly, and keeps you informed throughout the process. If an agent is juggling too many clients, they might not be able to give you the attention you deserve. You want someone who will be readily available and responsive. So, what’s the best way to get a feel for their communication style and preferences? Bankrate offers this advice:

“Interviews also give you a chance to find out the agent’s preferred method of communication and their availability. For example, if you’re most comfortable texting and expect to visit homes after work hours during the week, you’ll want an agent who’s happy to do the same.”

Trust Your Gut

Last, rely on your instincts. If you feel like you do or don’t click with one of the agents you’re talking to, that matters. Choose an agent you feel at ease with and who inspires confidence. The right agent should be someone you trust to guide you through one of the most significant transactions of your life. As Business Insider says:

“As long as you’ve properly vetted the agents you’re considering and ensured they have the necessary expertise, it’s ok to go with your gut . . . Maybe you have a better rapport with one of the agents you’re considering, or you just feel like they’re easier to approach. You’re going to be working closely with this person, so it’s important to choose an agent you’re comfortable with.”

Bottom Line

By following these tips, you can pick an agent who’ll provide the support and expertise you need to help make the process as smooth as possible. Connect with local agents to see if they’d be a good fit for working together.

When you’re thinking about buying a home, your credit score is one of the biggest pieces of the puzzle. Think of it like your financial report card that lenders look at when trying to figure out if you qualify, and which home loan will work best for you. As the Mortgage Report says:

“Good credit scores communicate to lenders that you have a track record for properly managing your debts. For this reason, the higher your score, the better your chances of qualifying for a mortgage.”

The trouble is most buyers overestimate the minimum credit score they need to buy a home. According to a report from Fannie Mae, only 32% of consumers have a good idea of what lenders require. That means nearly 2 out of every 3 people don’t.

So, here’s a general ballpark to give you a rough idea. Experian says:

“The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you’re applying for and your lender. Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage.”

Basically, it varies. So, even if your credit isn’t perfect, there are still options out there. FICO explains:

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single “cutoff score” used by all lenders, and there are many additional factors that lenders may use . . .”

And if your credit score needs a little TLC, don’t worry—Experian says there are some easy steps you can take to give it a boost, including:

1. Pay Your Bills on Time

Lenders want to see that you can reliably pay your bills on time. This includes everything from credit cards to utilities and cell phone bills. Consistent, on-time payments show you’re a responsible borrower.

2. Pay Off Outstanding Debt

Paying down what you owe can help lower your overall debt and make you less of a risk to lenders. Plus, it improves your credit utilization ratio (how much credit you’re using compared to your total limit). A lower ratio means you’re more reliable to lenders.

3. Don’t Apply for Too Much Credit

While it might be tempting to open more credit cards to build your score, it’s best to hold off. Too many new credit applications can lead to hard inquiries on your report, which can temporarily lower your score.

Bottom Line

Your credit score is crucial when buying a home. Even if your score isn’t perfect, there are still pathways to homeownership. Let’s connect if you want to go over your options with an expert.