Some Eye Fed Rate Cut Next Month

The Federal Reserve announced that it decided to keep benchmark interest rates steady on Wednesday amid continued concerns over inflation and the potential for economic slowdown related to the president’s tariff policy.

However, there appears to be some disagreement over the way forward, with at least one Fed official calling for a rate cut in July, a demand President Donald Trump has been making for months.

“We’ve been on pause for six months thinking that there was going to be a big tariff shock to inflation. We haven’t seen it,” said Christopher Waller, a Fed governor appointed by Trump back in 2020, per an interview he gave to CNBC.

The current benchmark rate is set at 4.25-4.50%. Meanwhile, mortgage rates ticked down to a four-week low of 6.81% for the 30-year on June 18, according to Freddie Mac. The 15-year dipped down to 5.96%. Still, rates are still far off from the less-than-3% lows seen in 2020 and 2021.

Waller isn’t the only one who thinks a rate cut is in order. Lawrence Yun, chief economist of the National Realtors Association, told TheStreet that the Fed is undervaluing the checks on inflation that could be realized by deregulation and low oil prices.

“Mortgage rates are high, but if the mortgage rate goes down, and if [American consumers] qualify for a mortgage, I think they will start searching for a home,” he said.

While you’d figure a lot of prospective homebuyers might want to wait and see how things shake out with the economy this summer, mortgage applications actually jumped earlier this month.

“Purchase applications were 20% ahead of last year’s pace, continuing to show strength compared to a year ago,” said Joel Kan, deputy chief economist for the Mortgage Bankers Association, according to South Florida Agent Magazine. “Despite ongoing uncertainty surrounding the economy, homebuyers seem to be taking advantage of loosening housing inventory in certain markets.”

Builders have been working to deliver more housing stock amid a national shortage, resulting in some leveling out in local markets where sellers have been holding a lot of the cards.

More options should be encouraging to those who have to move for one reason or another, and there are definitely more options. In fact, the national market hit a milestone last month, reaching more than 1 million listings for the first time since the winter of 2019, according to a report by realtor.com.