The Fed's Interest Rate Cut Cycle Arrives, What Does It Mean for Overseas Buyers?

Starting in September 2025, the Federal Reserve cut interest rates twice in a row, lowering the benchmark rate to 3.75%–4.00%.

- 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.

Not immediately.

- 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.

International capital's interest in U.S. real estate has increased.

- 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.

- Reduced financing costs: Interest rates drop from 7% to around 6%, easing monthly payment pressure.
- 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%.

During a rate-cutting cycle combined with a weakening dollar, it means:

- 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.

Short-term local increases:

- 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.

1. Cash buyers: Take advantage of the weakening dollar to purchase high-quality assets, focusing on core markets such as California and Florida.
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.

- Core cities: Markets with concentrated foreign investment, such as California, New York, and Miami, Florida.
- Cash flow properties: Strong rental demand and stable returns.
- School district and tech hub cities: Strong value retention, suitable for long-term asset allocation.

The interest rate cut cycle will not immediately make houses cheaper, but it will bring:

- 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'.