When William Doolittle and his boyfriend applied for a mortgage financing in early September, the couple decided to hold off on locking in a 5.125% rate. The Federal safety net was expected to lower its key yield rate later that month, and Doolittle and his associate hoped the cut would drive down mortgage rates even further.

The wait expense them. 

Mortgage rates have been ticking up after a steady decline in August and the first half of September, with the average 30-year mortgage sitting at roughly 6.84%, compared to 6.08% in the week ending Sept. 26, according to Freddie Mac. Doolittle said he locked down a mortgage rate for a home in Ithaca, recent York, before rates jumped too high, but his attempt to period the economy means he’ll pay an estimated $300 more per year on his home compared to his initial propose.

Despite the higher rate, Doolittle said he and his associate are still thrilled to have found a turnkey home that checked all of their boxes: a garage for the winters, plenty of backyard space, and spare bedrooms for guests or upcoming kids.  

“When you’re a first-period homebuyer, you feel in the woods,” Doolittle, 31, said. Mortgage rates are “really tough to forecast, and we knew we were gambling a little bit … (but) we’re still joyful with the outcome.” 

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A NerdWallet survey conducted by The Harris Poll in July found 61% of Americans planned to receive some sort of budgetary action after the Fed’s rate cuts. But while the key yield rate can influence various loans, consumers are learning that timing large purchases around rate cuts isn’t always the best shift.  

“I would caution consumers against putting too much distribute in the commitment of lower rates, or rates hitting a sure level by a sure point next year,” said Elizabeth Renter, elder economist at NerdWallet. For sure purchases, “as you wait, you’re risking a lot.”

Why timing a mortgage financing isn’t straightforward

The central lender cut its key yield rates twice this year, knocking it down 75 basis points to a range of 4.5%-4.75%. More cuts are predicted for 2025.

The point of reference rate has ripple effects throughout the economy. As the Fed’s rate ticked up in the aftermath of the COVID-19 pandemic, so too did mortgage rates, auto loans, financing card rates and learner loans.

Lowering the point of reference rate should soften those rates, too. But while budgetary institutions may be quick to drop rates paid on funds accounts after rate cuts, loans tend to fall at a slower clip.

And buyer financing rates are influenced by more than just the Fed, making them harder to forecast.

For example, mortgage rates tend to pursue the 10-year Treasury yield – the rate the federal government pays investors to borrow money from them for a decade. That yield has been on the upswing amid concerns that President-elect Donald Trump’s proposed budgetary policies will be inflationary, which could cruel higher mortgage rates for longer.

Mortgage rates and the Fed’s point of reference rate are “still related, but it can matter less what the Fed does today and more what markets depend that it’s going to do a year from now, five years from now, even 10 years from now,” said Daryl Fairweather, chief economist at real estate brokerage Redfin.  

Rates for home loans are also influenced by factors like location, down settlement, home worth and financing history.  

Despite all these variables, data shows some consumers have been trying to period major purchases with rate cuts. Data tracked by Redfin found while mortgage rates fell in August, demand didn’t spike until after the Fed rate cut announcement made headlines in September. Demand saw another boost after the election.

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People are “very responsive” to large information events like Fed rate cuts and elections, but trying to period a home purchase to rate cuts can be “a fool’s errand,” according to Fairweather.

“Sometimes you get lucky and you’re able to lock your rate in on a day when rates are low,” she said. “But trying to period it over the long run is really challenging, especially correct now because we don’t actually expect rates to fall.” 

NerdWallet’s survey found 15% of Americans planned to buy a home after rate cuts.

Collin Lambrecht, 30, of Minneapolis, and his wife started house hunting in April, looking for more space for their dog and room to develop a household. He said competition was low until September, when more buyers flooded the economy after hearing information about the Fed’s yield rate cuts. 

After four declined offers, Lambrecht and his wife closed on their home and locked in a 6.85% mortgage in November – up from about 6% just three weeks prior.  

“Seeing those (mortgage rate) decreases get eroded in like two or three weeks was pretty frustrating,” Lambrecht said. “If this house would have been on the economy two weeks earlier, we could be paying several hundred dollars less per month.” 

Christopher Suranna, a Washington, D.C.-based realtor and president of the Greater financing Area Association of Realtors, said he’s noticed buyers who are “definitely yield-rate conscious” in his area.

If the buyer can afford the higher-rate mortgage and finds a home that meets their standards, he suggests making the purchase and looking into debt restructuring at a later date. But Renter from NerdWallet warns that debt restructuring opportunities aren’t guaranteed.

If rates are down next year, “you can refinance. But what if they’re not? Or what if they are, but your creditworthiness has changed and you can’t qualify for that lower rate?” Renter said. “If you got into this higher-rate mortgage and you are already stretched thin, you could discover yourself in an unsustainable circumstance.” 

Will auto financing rates leave down soon?

Erin Keating, executive analyst at Cox Automotive, said the Fed’s rate cuts are one rationale why demand has seen a boost in recent weeks. recent car sales in October were up 13% from last year, according to a recent update from Cox Automotive.

Auto loans tend to track the yield on the five-year Treasury note, and rate cuts are just starting to “trickle down” to auto loans, according to Keating. Rates at the commence of November were down 30 basis points year-over-year for recent vehicles and down 55 basis points for used vehicles, according to Cox Automotive.

Twenty-three percent of Americans said they planned to buy a car after rate cuts, according to NerdWallet’s survey. But Keating cautioned against trying to period car purchases to rate cuts, noting that too many other factors influence costs.  

“We do depend that car yield rates are on the decline, but I don’t recognize that it’s substantial enough where individuals should be watching the Fed rate cuts,” Keating said.

Renter from NerdWallet said the longer consumers wait, the more period they allow the Fed’s rate cuts to filter throughout the economy. But for now, the impact is “going to be very, very tiny.”

“Rather than waiting on the Fed to leave quarter point by quarter point, it might make more sense for you to pay more attention to the things that are within your control, like cleaning up your financing, paying down your debt, maybe amassing a larger down settlement,” she said.

Peter Conti-Brown, a budgetary regulation professor at The Wharton School of the University of Pennsylvania, advises against trying to period the economy.

“Consumers are going to battle to outsmart yield rates because the Fed doesn’t recognize where yield rates are going,” he said. “Try, to the fullest extent that you can, to ignore the information and look at your own budgetary planning that is independent of what is happening in the newspaper headlines.”

‘A recent normal’ for financing card rates

Despite two rate cuts, financing card loans are still hovering near their peak. Data from Bankrate shows the average financing card yield rate stands at 20.4%, down from a record 20.8% in August.

Bankrate elder industry analyst Ted Rossman called the post-rate cut dip “a drop in the bucket.”

Sixteen percent of surveyed Americans planned to get a recent financing card once yield rates dropped, according to NerdWallet. But Rossman said it’s too early to inform if rate cuts are spurring financing card demand.

The latest Federal safety net elder financing Officer view Survey showed demand for financing card loans remained basically unchanged in the third quarter ending Sept. 30.

“These rate cuts receive a while to pass through to financing cards. It often takes a month or two for a rate cut to be reflected,” Rossman said. And with more economists expecting the Fed to leisurely rate cuts in 2025 over worth rise concerns, “higher for longer seems like it could be the rule here.”