$BTC People on here post everyday that the Fed needs to lower rates to make housing more affordable.
Lower rates may make shorter term loans more attractive, but mortgage rates are more so affected by the long end of the yield curve, which the Fed does not directly control.
In 2024, the Fed cut rates and it caused mortgage rates to go up, as the bond market started repricing inflation accelerating again.
The only way the Fed cutting rates will also coincide with the 30yr durably going down is if the market is convinced that inflation is conquered.
With tariff uncertainty in the short term, it is unlikely that aggressive rate cuts would actually make mortgage rates more affordable. In fact, it would likely have the opposite effect.
A lot of people on here keep demanding lower rates to revive the housing market. But many of them completely miss this idea, or they know about it, but refuse to let the facts get in the way of a good narrative.
I think there is a good chance Powell will cut at the next Fed meeting, but I also think it may cause the long end to go higher once again.
