It may make sense to fix the mortgage interest rate after the next interest rate cut by the Fed, but this will not be the case for everyone. Getty Images
As 2024 draws to a close, inflation continues to slow, the labor market remains lackluster and the Federal Reserve is trying to maintain balance through interest rate cuts. The Fed’s September rate cut caused mortgage interest rates to initially fall, but they rose again soon after due to a combination of factors. Now, with another Fed cut expected this month, many homebuyers are wondering: “Should I hold my mortgage interest rate after the November rate cut?”
Mortgage experts agree that the right time to lock in a rate depends on your situation. Making your move later this month could offer some advantages. But your timeline, financial preparedness, and local housing market should guide your decision. The choice isn’t just about getting the lowest price, you have to find the right balance for your needs.
If you’re thinking about buying a home soon, choosing to lock in your interest rate after the reduction could affect your monthly payments for years to come. Here’s what mortgage professionals want you to know about timing your rate lock.
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Should you lock in your mortgage rate after the November rate cut? Experts weigh in
“In my mind, yeah, I’ll go ahead and close,” says Josh Green, a mortgage loan officer at Barrett Financial Group. “[Securing] The price now may give you peace of mind against any sudden jumps.”
But the “right answer” isn’t always black and white. Markets don’t always respond to Fed cuts in predictable ways, and factors like economic and inflation data can push mortgage interest rates in unexpected directions.
Dean Rathbun, mortgage loan officer at United American Mortgage Corporation, offers an interesting observation: “[Every] “When the Fed changes interest rates, it takes a few days for the market to react and determine how it will affect the economy and Treasuries.”
That’s why your decision should ultimately depend on your circumstances. This is where it makes sense to lock in the price and how long you might want to wait.
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When it makes sense to lock in a mortgage rate after a reduction
“[You should] lock [your] Mortgage rate as soon as [you] Find a home [you] There are a limited number of homes for sale, and waiting too long could mean missing out on the opportunity altogether, advises Robert Driscoll, director of residential lending at Rockland Trust.
This strategy becomes even more important when working with strict budget limits. Green warns that if your debt-to-income ratio is tight, even a small increase in your interest rate could complicate loan approval. A rate lock protects you from sudden increases that could affect your monthly payments or even derail your loan.
Remember, you can refinance later if rates drop. But you can’t go back and buy a home you lost while waiting for better rates. In today’s competitive market, being prepared to reserve could mean the difference between securing your home and starting your search all over again.
When postponement is the best strategy
Green tells his clients that a postponement may make sense if they have a flexible schedule and if there are strong signs that interest rates could fall soon. However, he warns that waiting comes with risk: “Prices can move quickly on any surprising economic news, which could mean missing out on prices available today.”
Driscoll highlights that the most important deciding factor is not the price itself. It’s your financial preparedness.
“Borrowers must [wait] If they are not in a financial position to buy. “This is true regardless of interest rates,” Driscoll says.
Your focus should be on building a strong financial foundation first. If you decide to wait, remember that timing the market perfectly is almost impossible, as several factors affect mortgage rates. There is always a chance to go up rather than down. In most cases, you can’t go wrong with taking action when your finances align with your homebuying goals.
Bottom line
“Before installing, look beyond the price,” Green suggests. “Inflation is big – when it is high, mortgages usually go up. Employment data is another thing to watch because strong jobs numbers can lead to higher interest rates.”
Your next step? Contact at least three mortgage professionals and discuss your situation.
“Not every client needs a 30-year fixed rate,” Rathbun says. For example, “[you] You may take advantage of a five- or seven-year ARM [if you’ll] Keep the loan for the short term only.” An experienced advisor will help you understand your options, including adjustable rates, shorter mortgage loan terms, and interest-only loans.
Finally, don’t forget to explore available assistance programs while making the decision. “Many homebuyer programs at the local and state levels [can help with your] Down payment, especially [if you’re a] “First-time buyer,” says Driscoll. Getting pre-approved now can also help you move quickly when you’re ready — whether that’s right after the Fed’s November meeting or in the future.
