Feds cut interest rates by 0.50%. There is more to the story.

Yes, it is exciting news, but it is important to understand, mortgage rates do not move in tandem with that cut. So, if you’ve heard “rates dropped .5%” that is a statement on the overall interest rates. It is not a direct statement on mortgage rates. Now, it is true that mortgage rates are influenced by the Fed’s actions, but again they don’t move in tandem.

Mortage rates largely track the yield on the 10-year Treasury bond.  And those are driven by a variety of factors including the outlook for inflation and the Fed’s moves and investors reactions to those moves.  

With that education in mind, 11 months ago mortgage rates were hovering around 7.79%. On Thursday, Freddie Mac stated they are down to 6.09%.  That’s certainly a noticeable and meaningful drop. And that drop has been slowing happening over the last few weeks. But Fed’s announcement draws a lot more concentrated attention especially to those who are not watching them daily or even weekly.

Is this good news for real estate? Yes. Low rates can give confidence to sellers that they can obtain an appropriate mortgage on their move up property should they sell—which means they start to consider putting their current homes on the market which could increase inventory = more options for buyers.

For buyers, the affordability of buying a home grows. With lower interest rates you may find that you can feel comfortable purchasing your first or your next property.

Let’s talk through your situation. 

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