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

Does this mean Bay Area home hunters should open Zillow in anticipation of a mortgage deal? Not quite yet, say local real estate experts.

In most cases, lenders have already passed on the interest rate reduction in the mortgages they are currently offering.

“There won’t be much change with the 30-year fixed rate,” said Oscar Wei, an economist with the California Association of Realtors.

On Wednesday, the central bank cut its benchmark interest rate by half a percentage point — an unusually steep reduction — to 4.9%. It was the first cut in four years, a signal that Fed officials are optimistic about the direction of the economy.

The Fed has kept interest rates at their highest levels for more than two decades in an effort to combat inflation in the wake of the coronavirus pandemic. The move helped stabilize consumer prices but also sent mortgage rates soaring, sometimes pushing up monthly payments on new mortgages by thousands of dollars and forcing many potential homebuyers out of business.

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

Homebuyers shouldn’t expect mortgage rates to fall back to bargain levels anytime soon. But relief could still be on the way, as the Fed is expected to continue lowering borrowing costs in the months and years ahead.

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

When will mortgage rates drop?

That has actually already happened.

Rates have fallen more than a percentage point since they topped 7% this spring, falling most rapidly in the past month and a half. That’s largely because lenders anticipated the Fed’s move and adjusted their rates accordingly.

However, the Fed signaled Wednesday that it plans to cut rates twice more before the end of the year, by which time Wei expects mortgage rates to fall to around 6%.

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

What does the interest rate cut mean for house prices?

Probably not very much.

But Wei said that once people who have a wait-and-see attitude about buying a home realize the immediate impact of the Fed’s move, it could prompt more people to buy a home.

“They may start to think more seriously about buying because they haven’t seen a significant drop 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 seasons, prices could still fall month-on-month. But Wei noted that some parts of the Bay Area, particularly wealthier cities where buyers can afford to pay more for a down payment, could see prices rise.

In August, the median price of single-family homes in the Bay Area fell to $1.24 million, a 4.6% drop from July and a 1.6% year-over-year decline.

Over the next two years or so, lower mortgage rates could convince homeowners who have been reluctant to sell because they don’t want to give up their lower rates to finally put their homes on the market. That could help ease the Bay Area’s tight housing market by bringing more homes to market. But the higher demand is expected to push prices up about 4% to 5% a year, in line with historical trends.