Oct. 7 at 7:45 PM
Fed rate cuts may not lower mortgage rates due to their link to long-term bond yields and inflation expectations. While the Fed recently cut rates by 25 basis points, mortgage rates remain high, and significant declines may require an economic slowdown.
Housing-related sectors face challenges: home builders, including Lennar and DR Horton, and retailers like Home Depot and Lowe’s are under pressure as mortgage rates stay elevated. However, strong economic growth and a dovish Fed support equities in the short term.
Berkshire Hathaway recently invested nearly
$1 billion in Lennar and DR Horton, signaling confidence in a potential cyclical rebound if mortgage rates ease. Investors must navigate the tension between Fed policy and housing affordability.
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