The Fed's Interest Rate Cut Cycle Arrives, What Does It Mean for Overseas Buyers?
The Fed has officially entered an interest rate cut cycle, with changes in U.S. mortgage rates, the dollar's trend, and overseas buyer behavior being reshuffled. This article analyzes the impact and strategies of rate cuts on global real estate investment in a Q&A format.
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1.1 Why did the Federal Reserve start cutting interest rates?
- Background: U.S. inflation fell to 2.9%, economic growth slowed, and the job market cooled.
- Goal: Reduce financing costs and stimulate consumption and investment.
- Market impact: The U.S. dollar index weakened periodically, and global capital flowed back into assets such as real estate and stocks.
1.2 Will the interest rate cut immediately lower U.S. mortgage rates?
- The 30-year U.S. mortgage rate remains around 6.2%.
- Reason: Long-term rates are influenced by bond yields and inflation expectations and do not move in sync with short-term rates.
- Prediction: Mortgage rates may slowly drop to around 6% over the next 1–2 years, but they will not return to the 3% level seen during the pandemic.
1.3 How has the market reacted to the interest rate cut?
- NAR data shows that foreign buyers' total purchases in the U.S. reached $56 billion in the 2024–2025 period, a 33% year-on-year increase.
- Largest buyers: From China, Canada, India, Mexico, etc.
- 56% of foreign buyers purchased with cash, indicating continued strong confidence in U.S. dollar assets.
2.1 What is the impact of interest rate cuts on overseas loan buyers?
- Opportunities for refinancing: Buyers can refinance in the future when rates are low, lowering long-term costs.
- Overseas-specific loans (DSCR, non-resident loans) become more popular, with LTV up to 70%.
2.2 What is the significance of interest rate cuts for dollar asset allocation?
- Dollar asset prices become relatively more attractive.
- Foreign currency investors get a higher 'exchange rate discount' when purchasing U.S. real estate.
- Suitable for medium to long-term positioning: Lock in quality assets and wait for the refinancing cycle.
2.3 Will interest rate cuts push up U.S. housing prices?
- Rate cuts boost homebuying demand, especially in popular states like California, Florida, and Texas.
- Supply remains tight, making quality listings more competitive.
However, nationwide average increases are limited because mortgage rates are still high, preventing a widespread surge.
3.1 How should overseas investors respond to the interest rate cut cycle?
2. Loan buyers: Enter the market now, and reduce costs through refinancing in the future.
3. Long-term investors: Prioritize properties with stable rents and strong liquidity to hedge against interest rate fluctuations.
3.2 Which types of markets are more worth paying attention to?
- Cash flow properties: Strong rental demand and stable returns.
- School district and tech hub cities: Strong value retention, suitable for long-term asset allocation.
3.3 Key conclusion: What does an interest rate cut mean for overseas buyers?
- A more relaxed financing environment;
- Stronger attractiveness of dollar-denominated assets;
- Higher market competitiveness.
Summary: This is a shift from 'interest rate logic' back to 'asset safety logic'.