The news many potential homebuyers have been waiting for is finally here: the Federal Reserve is cutting interest rates.

Does that mean Bay Area home hunters should turn to Zillow in hopes of finding a cheap mortgage loan? Not yet, say local real estate experts.

For the most part, lenders have already factored the interest rate cut into the mortgages they are now offering.

“The 30-year fixed rate is not going to change much,” said Oscar Wei, an economist with the California Association of Realtors.

On Wednesday, the central bank cut its key interest rate by half a percentage point – an unusually sharp cut – to 4.9 percent. It was the first cut in four years and a sign that Fed officials are optimistic about the economy’s development.

The Fed had kept interest rates at more than two decades’ high to combat inflation amid the coronavirus pandemic. While that decision helped stabilize consumer prices, it also led to huge increases in mortgage rates — increasing monthly payments on new home loans by thousands of dollars in some cases and forcing many potential homebuyers out of the market.

Currently, the average interest rate on a typical 30-year fixed-rate mortgage is about 6.2 percent, according to the latest data from Freddie Mac. That’s more than double the 2.8 percent rate that hit a near record low three years ago.

Homebuyers shouldn’t expect mortgage rates to fall back to these bargain levels any time soon, but some relief may be on the way, as the Fed is expected to continue lowering borrowing costs in the coming months and years.

“I think towards the end of the year, mortgages will start to go down,” said Brett Nicoletti, branch manager at Guild Mortgage in Los Gatos.

When will mortgage rates fall?

Actually, they already are.

Since rising to over 7% in the spring, interest rates have fallen by more than one percentage point. The fastest decline in a month and a half. This is mainly because banks have anticipated the Fed’s move and adjusted their interest rates accordingly.

However, the Fed indicated on Wednesday that it plans two more rate cuts before the end of the year. Wei expects mortgage rates to fall to about 6% by then.

Looking ahead, Fed officials have said they will likely continue cutting interest rates at least through 2026. “I think the long-term interest rate will be somewhere around 5%,” Wei said.

What does the interest rate cut mean for property prices?

Probably not very much.

But Wei said if those who have been holding off on buying a home realize the immediate impact of the Fed’s move, it could encourage more people to enter the market.

“Perhaps they are actually thinking more seriously about buying because they have not seen a significant decline in interest rates,” he said.

That could put some upward pressure on home prices. However, as the market enters the traditionally quiet fall and winter season, prices could still fall on a month-to-month basis. However, Wei noted that prices could rise in some parts of the Bay Area, particularly in wealthier cities where buyers can make a larger down payment.

In August, the median price for a single-family home in the Bay Area fell to $1.24 million, a decrease of 4.6 percent from July and 1.6 percent from a year ago.

Over the next two years or so, lower mortgage rates could convince homeowners who have been hesitant to sell because they didn’t want to give up the lower interest rate to finally put their properties on the market. That could help ease the Bay Area’s tight housing market by getting more homes on the market. But higher demand is expected to drive prices up by about 4 to 5 percent per year, which is in line with historical trends.