Should you lock in a mortgage rate after the November rate cut? Experts weigh in
As 2024 draws to a close, inflation continues to cool, the job market remains lackluster and the Federal Reserve is trying to maintain balance with rate cuts. September's Fed rate cut initially pushed mortgage rates lower, but they climbed back up shortly after due to a mix of factors. Now, with another Fed cut expected this month, many homebuyers are wondering: "Should I lock in a mortgage rate after the November rate cut?"
Mortgage experts agree that the right time to lock in a rate depends on your situation. Making your move later this month could offer some advantages. But your timeline, financial readiness and local housing market should guide your decision. The choice isn't just about getting the lowest rate — you must find the right balance for your needs.
If you're thinking about buying a home soon, your choice to lock in a rate post-cut could impact your monthly payments for years to come. Here's what mortgage specialists want you to know about timing your rate lock.
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Should you lock in a mortgage rate after the November rate cut? Experts weigh in
"In my opinion, yes, I'd go ahead and lock," says Josh Green, a mortgage loan officer at Barrett Financial Group. "[Securing] a rate now might give you peace of mind against any surprise jumps."
But the "right answer" isn't always so black and white. Markets don't always respond to Fed cuts in predictable ways, and factors such as economic and inflation data can push mortgage interest rates in unexpected directions.
Dean Rathbun, a mortgage loan officer at United American Mortgage Corporation makes an interesting observation: "[Every] time the FED makes a rate change, the market takes a few days to react and decide how that will affect the economy and Treasury Bonds."
That's why your decision should ultimately depend on your circumstances. Here's when it makes sense to lock in a rate, and when you might want to wait.
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When it makes sense to lock in a mortgage rate post-cut
"[You should] lock in [your] mortgage rate as soon as [you] find a home [you] love and are in a financial position to buy it," advises Robert Driscoll, director of residential lending at Rockland Trust. With limited homes for sale, waiting too long could mean missing out completely.
This strategy becomes even more paramount when working with strict budget limits. Green warns that if you have a tight debt-to-income ratio, even a small rate bump could complicate your loan approval. A rate lock protects you from sudden increases that could affect your monthly payments or even derail your loan.
Remember, you can refinance later if rates drop. But you can't go back to buy a house you lost while waiting for better rates. In today's competitive market, being ready to lock in could mean the difference between securing your home and starting your search over.
When holding off could be the better strategy
Green tells his clients that holding off can make sense if they have a flexible timeline and if there are solid signs rates could drop soon. Still, he cautions that waiting comes with a risk: "Rates can move fast with any surprise economic news, which could mean missing out on the rates available today."
Driscoll highlights that the most important deciding factor isn't the rate itself, though. It's your financial readiness.
"Borrowers should [wait] if they aren't in a financial position to make a purchase. This is true regardless of interest rates," Driscoll says.
Your focus should be on building a strong financial foundation first. If you decide to wait, though, remember that timing the market perfectly is nearly impossible, as several factors affect mortgage rates. There's always a chance they could rise instead of fall. In most cases, you can't go wrong taking action when your finances align with your home-buying goals.
The bottom line
"Before locking in, look beyond the rate," suggests Green. "Inflation's a big one — when it's high, mortgages usually go up. Employment data is another to watch since strong job numbers can lead to higher rates."
Your next step? Connect with at least three mortgage specialists and discuss your situation.
"Not every client needs a 30-year fixed rate," Rathbun says. For example, "[you] may benefit from a five or seven-year ARM [if you'll] only hold the loan short-term." An experienced advisor will help you understand your options, including adjustable rates, shorter mortgage loan terms and interest-only loans.
Finally, don't forget to explore available assistance programs while you decide. "Many homebuyer programs at the local and state level [can help with your] downpayment, especially [if you're a] first-time buyer," says Driscoll. Getting pre-approved now can also help you move quickly when you're ready — whether that's right after the November Federal Reserve meeting or further down the road.
