Fed Rate Cut & Mortgage Rates – What Does this Mean to Me?

You may have heard – a few days ago, the federal reserve announced a rate cut.

Here’s what that means…

  • Fed cutting rates are a short term overnight bank to bank lending rate which DOES NOT have a direct impact on mortgages.
  • This cut will lower rates on credit cards, home equity loans, auto loans and other consumer loans that are affected by the “prime” rate.

What does this mean for mortgage rates?

  • It could move mortgage rates lower, but it is not doing that right now – (If the stock market rallies on this news, it could actually cause long term rates /mortgages) to increase.
  • Mortgage rates are based on the MBS (mortgage-backed securities) market – which is independent of the treasury bond as well as the stock markets but typically reacts within certain tolerances of those financial markets.

It can be a bit confusing right now and we are always here to answer your questions. If you want to review your options please don’t hesitate to contact us.

Also, check out my Facebook page for updates (google Marie Bjornson Mortgage) here and there about the market, suggested reading for perspective stuff, etc.

2020-04-05T15:44:38-07:00