09/19/2024
You have likely already heard that the Federal Reserve Board cut policy rates by 0.5% at their most recent meeting. At his press conference, Fed Chair Jerome Powell hinted at more cuts to come this year. The Fed's statement described recent cooling for both the job market and inflation. The Board believes a policy rate cut can boost private sector spending on labor without endangering the slow-down in inflation rates. While Powell is optimistic for more cuts this year, he reiterated that future data would determine when and if those cuts are made.
It’s important to keep in mind, the Fed does not directly control mortgage rates. In fact, investors in mortgage-backed securities often act in anticipation of Fed moves. Rates had already dropped to their lowest levels of the year. It’s too early to know where they will settle after the Fed’s action.
The long and short of it is that it appears that the tightening cycle from the Fed is finally over, as evidenced by the fact that this is the Fed's first rate cut in 4 years. Again, the Fed funds rate does not directly correspond to mortgage rates. Just because the Fed lowered their overnight rate by 0.5% does not mean that mortgage rates have dropped by the same. Rates had already started to lower in anticipation of this cut, and mortgage rates stayed fairly flat yesterday, despite the news of the rate cut.
As buyers and sellers, it’s important to remember that mortgage rates are dependent on a variety of economic factors, not the Fed funds rate. As I tell all my buyers, the best time to buy is when it makes sense to you!
As rates continue on their path, I am here to help answer any questions I can and to continue to provide excellent service, communication, and education.
Regardless of rates, we are closing loans every day!
I am here to be a resource for YOU! Please let me know how I can help!
