August 2019 Mortgage Market Update – The Fed Rate Cut Explained
Yesterday the Federal Reserve cut the federal funds rate by a quarter of a percent for the first time since 2008.
Federal Fund Rate
Some of you may be thinking that this means interest rates dropped by a quarter of a percent, however, this does not directly effect mortgage rates. The federal funds rate is the interest rate that is directly tied to banks and credit unions etc. This is the rate at which these institutions lend money to each other.
Mortgage rates are linked to mortgage backed securities that are traded on wall street. Mortgage rates, as a whole, are lower than they were this time last year. As a result of the Federal Reserve dropping rates, mixed with the current state of our economy, we are seeing an impact on mortgage rates. Rates today are lower than they have been over the last few weeks.
As we head into the end of the year it will be important to watch the Federal Reserve to see what they continue to do as it will have some sort of an impact on stocks and bonds.
The Federal Reserve did say that this was not something they would continue to do and that this rate drop is just a “mid cycle adjustment”.
What this means for you
If you are in the market, own a home or know someone who could benefit from a lower interest rate; give me a call, send me an email or apply here. I’d love to help you lower your payments or get you into your dream home.Questions? Contact Chris Today!