PHOENIX (AZFamille) — The Federal Reserve cut interest rates Thursday for the second time in the last three months. But many Arizona home buyers are wondering how soon they will receive relief from their mortgages.

With inflation falling, the Fed is slowly lowering its policy rate from its highest level in 40 years.

Mortgage rates generally fall when interest rates are reduced. But the cost of a new home loan is increasing, which is confusing and frustrating for potential buyers.

Economic expert John Wake says interest rates are just one factor lenders consider when determining mortgage rates. A 30-year fixed rate is still lower than it was this time last year, but it’s still too high for future buyers.

“Usually when they cut the rate, that means mortgage rates are going down,” Wake said. “It’s crazy right now.”

He says that while many hoped mortgage rates would fall along with interest rates, there’s a reason it didn’t happen: Lenders predicted it. “A lot of people were expecting them to drop rates, and so when they did, they already included that in the direction of their rates, so they didn’t drop that much,” said Wake.

This is the second rate cut in the last three months. The interest rate now ranges from 4.5% to 4.75%. Meanwhile, mortgage rates are 6.8%, up from 6.1% in September. “Nevertheless, mortgage rates are a percentage lower than they were a year ago at this time. So they’re not as bad as they used to be. » said Wake.

Wake says lenders use other factors to calculate mortgage rates, like unemployment and inflation, making the calculation complex and nuanced. In fact, he says, there’s only one thing that guarantees mortgage rates will go down: “If you go into a recession, mortgage rates will go down.” You may not have a job, but mortgage rates will still go down. The economy is pretty good. People kept thinking we were going into a recession and that would be good for housing and interest rates, but that’s not what happened.”

But what do mortgage rates mean for the real estate market? “The market right now is terrible for first-time home buyers,” Wake said.

And he says it’s difficult for sellers. “When your mortgage rate is three percent or less on the home you currently own and 6 percent on the home you want, that’s a huge difference in terms of your monthly payment,” Wake said.

Wake says, however, that the valley’s housing situation is unique because more people are moving here than in other parts of the country, which keeps prices high and the market strong.

As for battling the mortgage rate, he says you can buy and refinance, or consider expanding your current home if you need more space.

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