Fed Cuts Rates. Now What?

During today’s highly anticipated Federal Reserve Meeting, the Fed announced a reduction of the Fed Funds Rate and the Discount Rate by 0.50%.

What does this mean for home loan rates? Not as much as you might think. For now, anyway. To be clear, a cut to the Fed Funds Rate impacts the “Prime Rate,” which affects home equity lines of credit, credit cards, business loans, car loans and other consumer loan rates. This rate change, does NOT, however, have a direct correlation to home loan rates. That said, a reduction in the discount rate increases liquidity in the market. How this liquidity will impact lending rates is anybody's guess. Moreover, its impact on the gap between conforming rates and jumbo rates is unknown. As always, you need all the facts before making any decisions.

If a purchase or refinance is in your future, please contact us. We’ll be glad to put you in touch with a knowledgeable and reliable mortgage broker who can answer all of your questions.