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By Travis Anderson

In 2011, Travis started his career over and began building his own team; a team that has a different look and feel than most teams in the industry; one built SOLELY for the betterment of the client.

What’s Your Minneapolis Home Worth? Are you thinking of selling your home or interested in learning about home prices in your neighborhood? We can help you. Discover Your Home's Value

The media can be deceiving, and I have a great example for you. A recent Fox Business article boldly stated that the Fed’s decision to lower interest rates has “opened the real estate floodgates after four years.” While the headline is attention-grabbing, it is also misleading and inaccurate. Let’s talk about it.

First, the claim of a four-year decline in home sales starting in July 2022 is inaccurate. In reality, home sales and prices increased during the COVID-19 pandemic from October 2020 to July 2022. This trend is true in the Twin Cities but also nationwide.

Second, the article implies a direct connection between the Fed and mortgage rates. This is also incorrect. While the Fed rate can influence overall economic conditions and consumer sentiment, it does not directly determine mortgage rates.

“The Fed rate can influence overall economic conditions, but it does not directly affect mortgage rates.”

So, what affects mortgage rates? Aside from inflation, which can lead to higher interest rates, several factors play a significant role, such as:

• Treasury bond market. This is often considered the best indicator of mortgage rates. When the demand for Treasury bonds increases, interest rates rise, and vice versa.

• Supply and demand. If consumers are highly motivated to obtain a mortgage or refinance their homes, lenders may charge higher interest rates to maximize their profits.

• Consumer confidence. When the Fed lowers the rates, consumer confidence increases. This causes people to become more interested in moving, buying, and selling real estate, potentially pushing rates up.

These factors directly impact mortgage rates more than the Federal Reserve lowering its rate. If you have questions about how mortgage rates are moving or want to get some insights on the real estate market, reach out at (651) 485-6383 or travis.travisandersonteam@gmail.com. I’ll be happy to discuss it with you.

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