If you're in the market to buy or sell a home, you're probably watching mortgage rates closely, as interest rates significantly impact affordability. Many buyers and sellers are wondering if relief is on the horizon. While the Federal Reserve has signaled potential rate cuts later this year, it’s essential to understand that mortgage rates don’t follow the Fed’s decisions directly; instead, they are influenced by the bond market, specifically the yield on the 10-year Treasury note.

Mortgage rates react more to changes in the bond market than to the federal funds rate, which is the interest rate banks charge each other for short-term loans. If investors believe inflation is cooling and the economy is slowing down, bond yields and mortgage rates may decline even before the Fed cuts rates. On the other hand, if economic uncertainty continues or inflation remains stubbornly high, bond yields will stay elevated, keeping mortgage rates higher for longer.

For sellers, competitive pricing is key, as higher interest rates affect buyer affordability, meaning homes must be priced attractively to draw in serious buyers. While there is still strong demand in the market, sellers who price strategically and present their homes well tend to have the most success. For buyers, being prepared to act is crucial. With rates fluctuating, having financing locked in and ready to go will give you a competitive edge; this means working with a local lender, getting pre-approved, and understanding your budget before you start house hunting. The right home at the right price can still move quickly, so preparation is essential.

While no one can predict when mortgage rates will drop, it’s best to stay informed and act when the right opportunity arises. If you're considering buying or selling this year, we would love to help you navigate the market—whether you want to discuss home values and interest rates or need guidance, we’re here to help.