Housing prices are stuck on high while mortgage rates are slowly dropping. Will a FED rate cut help? Here's what you need to know and what you should do.

By this time tomorrow there will be thousands of articles published about the FED's final decision regarding interest rate cuts. This whole scenario is something that people in the market and in finance take very seriously. So seriously in fact that the mere presumptions cause economic movements that ripple out to the very edges of business, causing consumer action that drips down into even the smallest industries.

It's pretty widely expected that there will be an announcement of a decrease in interest rates, but that doesn't mean a better economy, nor that home interest rates must follow suit.

Does A Decrease In Interest Rates Mean More Affordable Housing?

Not by any means. In all reality, housing prices may rise up. Considering that they're already extremely high, there's a probability that you're still not going to find much relief in the housing market from a rate cut. The demand for affordable homes is high, the supply is low - essentially causing first-time home buyers to be priced out of the market. Next, the main factor blocking other potential buyers is apart from ugly interest rates is the high pricing and low availability. This results in a continual slow decrease in the number of sellers.

Without some kind of authentic positive movement, this situation is not going to change. Who wants to sell their home if they're unable to upgrade? That doesn't make sense. Not many people are looking to sell their home, downgrade, and lose money while doing so.

More than just the demand itself driving home prices higher is the fact that over 85% of currently active mortgages have an interest rate below 6%. It doesn't make the idea of paying an elevated price very logical or appealing. Home prices need to drop. Buying a home needs to become more affordable and attractive, otherwise pricing and lending requirements just continue to balloon upward and further out of reach.

It can get quite complex if you understand all the moving parts in play, regardless of the simple news stories that a rate cut will be economy-positive. An interest rate cut is not the miracle and magic that a lot of people perceive it to be.

Truth is, a quantitative easing cycle began back in June and there was very little talk about it. To keep the explanation simple, let's just say it caused the 10-year bond yield to drop, and a decline in the value of the dollar. This is how and where the current lowering of home mortgage rates actually began, and exactly why the news is clamoring about how rates are now at their lowest point since April of 2023 - not really the best benchmark to be using in my honest opinion.

Just to clarify, this upcoming FED rate cut (assuming it happens) will probably not be much of a beneficial catalyst for home buyers or the housing market as a whole. In fact, a "rate cut" as they put it is actually an economically inflationary move. But there's little that can be done except wait, watch, and see what happens.

One thing is for sure: a rate cut announcement will definitely be beneficial for the stock market. But we're talking about housing and mortgages - not the stock market. Let's stick to the subject here.

What Should I Do If I Want To Buy A Home?

So what can you do? Well, we're not financial experts, but the writing has been on the wall for quite some time. The obviously correct thing to do is whatever you feel is best for your financial situation. If that includes buying a new home anytime soon, it's a good idea to understand that your credit needs to be in the best position possible.

Even if your credit is pretty good, there's a solid probability that you could benefit from a decrease in utilization, or a higher credit score when applying for any type of financing. Authorized user tradelines are an extremely powerful short-term investment that can make an exceptional long-term difference in how your home mortgage or other important lending plays out. This is because they hold the potential to make your credit score shoot upward within a matter of weeks or less. The potential to lower the interest rates or better general loan terms will rise greatly. And even if it's only by the slightest margin, all that money adds up over the course of 30 years making it a key factor in your overall spend.

If you think your good credit stands to benefit from a better score, older age and more positive history, take a look at how authorized user tradelines work before signing that lending agreement. If they spark your interest (no pun intended) you may decide to invest in a little push and make things easier for yourself.