Real estate investors are closely watching the Federal Reserve’s Sept. 16–17 meeting. Markets see a strong chance the Fed will trim rates by 25 basis points, with some putting the odds above 90 percent.
Rate Trends This Year and Last
The federal funds rate has held steady at 4.25 to 4.50 percent since December. One year ago, it stood higher at 4.75 to 5.00 percent. That shift marked the start of an easing cycle after the Fed had raised rates as high as 5.25 to 5.50 percent in mid-2024 to fight inflation.
Why a Cut Looks Likely
Fed officials, including Gov. Christopher Waller, have signaled support for a modest cut now, with more possible in coming months if the labor market softens further. Inflation, measured by the Fed’s preferred Core PCE index, has cooled to about 2.9 percent year over year. Combined with softer jobs data, this gives the Fed room to adjust.
Impact on Housing
For the housing market, the biggest effect will be on adjustable-rate mortgages. Analysts expect ARMs to drop toward 5.5 percent by year’s end, compared with fixed 30-year rates that remain around 6.5 percent. That 70-point gap could push more buyers and investors to consider ARMs, especially for properties held or flipped within a short time frame.
Many homeowners, however, remain “locked in” to the ultra-low rates they secured in 2020 and 2021, making them less likely to sell. Even so, cheaper ARMs could revive activity in markets where affordability has been a major drag.
The Investor Takeaway
A September cut would mark another step toward a looser Fed stance. For investors, it may mean opportunities to refinance, lower borrowing costs on acquisitions, and greater flexibility in structuring deals. Whether you hold or buy, the Fed’s move could shape housing dynamics heading into 2026.
About Greg Englesbe
Gregory Englesbe is an Investment Banker and business leader. An experienced mortgage banking professional, Greg has secured more than $100 billion in servicing throughout his more than 36 years in the residential mortgage business, with assets in national and global real estate. With a personal net worth exceeding $1 billion, he is regarded as a leading force in the mortgage and real estate sectors.
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