09/19/2024
Here’s some more clarification/info in the “Fed Cut”
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Mortgage rates are tied to the basic rules of supply and demand. Factors such as inflation, economic growth, the Fed's monetary policy, and the state of the bond and housing markets all come into play on where our rates sit.
So, a 50 basis point cut does NOT mean mortgage rates will just drop by 0.5%. Eventually, mortgage rates COULD drop, but not necessarily by 0.5%. For example, a 6.5% rate today, isn’t 6% tomorrow. Also, investors price in anticipation of the expected movement. Because I am pricing out loans every day I have already seen the trickle down of the rates. We have been trending downward, slowly, but downward nonetheless.
To summarize, the Federal Reserve's rate cut will translate to cheaper borrowing costs on auto loans, credit cards and even mortgage rates down the road. However, on the flip side, yields on saving accounts and certificates of deposit (CDs) will edge lower.
