09/19/2024
Mortgage Updates!!!
I see a ton of comment relating to the fed cut yesterday! The fed announced a 50 basis point cut, (.5%) to the federal fund rate! So mortgage rates dropped and the what was, let’s say 6.5% is now 6% right?
Wrong! Though mortgage backed securities are highly influenced by the federal open market committee and their shift in monetary policies, they are directly correlated. This rate is a range for one, and it’s the cost for banks to borrower overnight! Any financial depository is required to carry a interest bearing reserve amount in the case of a bank run, or their clients essentially withdrawing all their money they keep in their bank. Now if they borrow more than that required reserve amount, they then can lend that out to create wealth for the bank to stay financially in business!
So if that rate is cheaper to borrower, it then it turn makes it cheaper to lend out!
Car notes, credit cards and whatever else!
All good for the financial industry but where does mortgage rates come to play! Where it’s a free market like our stock market, it’s a securities treasury that is a safe place to store money and if that cost is lower from these banks, it’s essentially going to allow more i creditors to buy those treasuries and keep a return. The more they rally, the cheaper rates can go down! This is a reactionary market so we’ve already had most of our industry price this anticipated announcement in, so we saw 2-3 weeks ago a slow drop on rates! This is why. So since the cut was in regard to stop a rise in unemployment it actually caused mixed reviews in the market and MBS, and rates stalled and actually came up just a smidge!
So, yes it’s amazing news, but your right is always your right: keep communication with your loan office if you are in the market for a refinance or a purchase and when you feel good, or ready! Let’s go!
I would love to be of assistance anytime 775-391-1005
