Last Week in Review: Three Things the Fed Said
This past week the Federal Reserve cut the Fed Funds Rate for the second time this year, lowering the rate to 2.00%. Remember that the Fed Funds Rate is a short-term, overnight rate that has little effect on home loan rates. Home loan rates respond to the trading activity in Mortgage Bonds, which are influenced by the economic outlook and inflation expectations.
Not all Fed members were on board with the .25% rate cut. A few preferred not to cut rates while another wanted a bigger .50% cut.
Along with the Fed rate cut, here are three important takeaways from Fed Chair Powell's press conference and the Monetary Policy Statement:
After the Fed came and went, home loan rates actually ticked up slightly. Why? The U.S. economy is not slipping into a recession and the Fed will take measures, like cutting the overnight Fed Funds Rate, to prevent it from doing so. Think good news is bad news for home loan rates.
Bottom line: If you have a family member, friend, or client considering a refinance or home purchase, there may never be a better opportunity to lock in a home loan rate, while they hover near three-year lows.
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