Feds Cut Rate

As you’ve probably seen in the headlines, the Federal Reserve announced a 0.25% cut to the Fed Funds Rate today.  This move impacts short-term borrowing costs –like credit cards, auto loans, and home equity lines.  It doesn’t directly set mortgage rates. The Fed’s decision and their guidance on future cuts can influence investor sentiment in the bond market and that is where mortgage rates are truly set.

Here’s what we’re seeing:

• Mortgage rates did not immediately drop by 0.25%. Instead, they moved only slightly as markets had already priced in today’s cut.
• The bond market is paying close attention to the Fed’s comments about inflation cooling and potential additional cuts later this year. If investors believe inflation will continue trending lower, mortgage rates could ease further.
• For buyers on the fence, today’s decision reinforces that the Fed is in “easing mode,” which could provide more stability in mortgage pricing as we head into the fall market.

What this means for you:

• Buyers may not see a dramatic rate drop overnight, but we are in a more favorable trend compared to earlier this year.
• Lower borrowing costs improve affordability and could bring more buyers back into the market for.
• Buyers its a great time to re-engage with your agent if you paused your search due to higher rates.  Monthly payments may now look more manageable.
• Homeowners who purchased or refinanced in the last couple of years at higher rates may also want to revisit a refinance scenario. You could lower payments or consolidate debt.