“The Fever Has Broken”: Action Steps For Agents After Rate Cuts


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The Federal Reserve cut the fed funds rate last week for the first time in over four years. How does this affect mortgage rates, buyer and seller psychology, and even potentially lead to much-needed inventory of homes for sale?

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First, David Childers with Keeping Current Matters breaks down the details, and then we pivot to provide four ways agents can communicate these changes to the market in a way that leads to opportunities for more listings and closed transactions.

David Childers on the change in policy

“A couple of weeks ago, when the Federal Reserve met, they said it is time for policy to change,” Childers said. “Last week, they came in and cut the fed funds rate by 50 basis points. There are a couple of things people need to remember; the Federal Reserve does not control mortgage rates, they can only hope to influence it.

“Because they came out and said they were planning to cut the fed funds rate a few weeks earlier, the influence of this cut was largely baked into the mortgage rates already. We saw mortgage rates tick up slightly after the rate cut announcement. The key is to understand that this change in policy does usher in a new direction of rate cuts, but there will be volatility in rates as this policy change is acted upon now and in the coming year or so.”

Childers used the following analogy to describe this change in policy and how it can affect the overall real estate industry: “It’s like when you have been sick and the fever breaks. You’re not out of the woods yet, but you’re heading in the right direction.”

Looking toward the future

After discussing the fact that the anticipated rate cut was mostly factored into the mortgage rates prior to the cut, I asked Childers what the market is believing the next moves might be by the Fed and how those may influence the mortgage rates in the future.

“In a poll done by Reuters between Sept. 6-10, most economists believed we would see three rate cuts before the end of the year. We had the first one last week, and whether we have one more or two more by the end of the year, the key is that now the discussion is about how many rate cuts are anticipated versus [whether they’re] going to cut rates.

“That is a shift in mindset that can make a big difference moving forward. Most predictions are for an additional five to six rate cuts in 2025 as well,” Childers said.

I then asked about what KCM watches and if there are indicators agents should watch and understand. Childers said, “We watch the 10-year treasury yield due to the symbiotic relationship they have had with mortgage rates for the last 50 years (as witnessed in the slide below). The average spread between them over the last 50 years has been 1.75 percent or 175 basis points. So, we can watch the direction of the 10-year treasury to get an indication on the direction mortgage rates will tend to move.”

Childers went on to explain, “Although the average of the spread between the 10-year treasury yield and 30-year fixed mortgage rate has been 1.75 percent over the last 50 years, we saw it swell to 2.761 percent at the beginning of 2023. I’ve always equated the spread as a measure of fear in the market.

“As rates were rising, people were fearful that they may not be able to afford the home they desired. But the spread has been narrowing (as seen in the graphic below), and as this moves closer to norms, that should bode well for mortgage rates as well.”

The conversation then shifted from not only how these factors benefit buyers but how they have the potential to unlock inventory from many sellers who are not willing to move, considering they have a 2.5 percent to 4.5 percent mortgage rate on their current home.

How low must rates go to create a shift?

To answer that question, Childers shared this graphic from a survey Bankrate recently conducted.

“Bankrate asked the question, at what mortgage rate, if any, would you need to be comfortable selling a home? The survey found that 35 percent of homeowners said that if interest rates go below 6 percent, they would be comfortable selling. As I’ve mentioned before, 70 percent of potential buyers abandoned their search in the past year because of rising costs and affordability. Many of those were sellers who were looking to sell their home and buy another one.

“Based on this survey, interest rates below 6 percent could be a key factor in unlocking some of the inventory we need in much of the country to see an increase in transactions.”

4 ways to communicate market factors and start conversations

The conversation then shifted from him providing data to a discussion of how agents can utilize these market factors to create opportunities for real estate-related conversations. Knowledge is power, but it is only useful when it is acted upon.

Many agents understand or have access to information. The problem is that many aren’t sure how to share the information effectively with their database or on social media that benefits prospective buyers and sellers while creating opportunities for their business.

With that in mind, the following are four examples of marketing strategies I’ve seen over the past week that agents can copy or use as models in their businesses immediately.

This first example is from Keeping Current Matters. It’s a social post displaying the effect mortgage rates have on monthly payments along with their suggested caption and hashtag.

Next is an engagement email agents can send to their database created by Sharran Srivatsaa, president of Real. He titled it the rate inspection email. It shows your database you are knowledgeable about the state of the industry and that you understand one of the main considerations they have when buying. It also acts as an opportunity for prospective buyers to identify themselves.

The third example is an Instagram green screen video idea I created that agents can utilize to capture leads. If you aren’t sure how to create a green screen video on Instagram, go to YouTube and search for how to create one for easy instructions. The key is to utilize an article or graphic behind you and discuss what it means with a call to action.

This is an example script for a video like the one pictured below:

Mortgage rates have been trending down, nearing 6 percent recently, off a high of nearly 8 percent last year. The graphic behind me references a survey where 35 percent of homeowners said they would be comfortable selling their homes if interest rates dropped below 6 percent.

If you’re considering selling your home in the next 12 months, there are some critical things you can do in advance of listing your home to increase your sales price. If you’d like a copy of my free guide titled “7 things every homeowner must do before listing their home for sale to maximize their sales price,” comment “Guide” in the comments section, and I will direct message it to you.

If you’re wondering how to create a guide like that, simply use ChatGPT, and you will have one in minutes. Utilizing a tool like Manychat to automate responses is an alternative for this strategy as well.

Finally, here is a suggestion I saw Jimmy Mackin, co-founder of Listing Leads, make for an Instagram story utilizing a poll to increase engagement. Voting on an Instagram poll is not anonymous, so seeing who votes for certain parts of the poll is a great way to identify potential listings and buyer opportunities.

We aren’t out of the woods yet, but an environment where the fed funds rate is being cut instead of raised has historically been better for the real estate industry. Now is the time for agents to become the resource for information and professionalism. Utilize the knowledge you have and serve your prospects and clients at the highest level possible. If you do that, your business can’t help but grow.

Jimmy Burgess is a real estate agent and national team builder with Real Brokerage in northwest Florida, servicing the 30A, Destin, and Panama City Beach markets. Connect with him on Instagram and LinkedIn.





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