A new report issued by WalletHub found that there is a 78% chance the Fed drop interest rates on July 31, and that mortgage rates will fall if they do.
According to WalletHub, there is a 78% chance interest rates could drop 25 basis point, and a 21.4% chance they would drop 50 basis points, and 72% of those surveyed would be in favor of cut to interest rates.
Also, 48% of respondents said they would be more confident in the economy if the Fed cut the rates.
The impact on housing, according to those who answered the survey, was that 44% felt their mortgage payment would be less expensive if rates are cut. Credit cards followed at 29%.
WalletHub states “we won’t see much of a chance” if a rate cut is decided in July, as the mortgage markets have accounted for the move.
“Mortgages have fixed rates that are priced with a far longer timeframe in mind than other borrowing vehicles,” the report stated. “However, that is not to say Fed rate changes don’t make mortgages more or less expensive for new borrowers.”
WalletHub’s estimates a rate cut could drop the cost of mortgage by around 10 basis points.
The Fed has cost the average homebuyer more than $38,000 since 2015, assuming an 80-basis point rise on a 30-year fixed rate mortgage from January 2015 to January 2019. WalletHub states that increase is due solely to the nine Fed rate increase occurring during that time.
A rate could be what the market needs, as CNBC reported last week that the overall volume of mortgage applications for the week fell 1.9%.
The volume, however, is still 34% higher than it was last year, and the average rate for a 30-year fixed rate mortgage fell to 4.08%.
Also declining this week was refinance applications, which fell 2%, but 81% higher than in 2018.
Declines could also be fell in home sales, as the National Association of Realtors (NAR) stated that existing-home sales fell by 1.7% in June month-over-month, to a seasonally adjusted annual rate of 5.27 million. Additionally, half of the major U.S. regions recorded minor sales jumps while the other half experienced greater declines.