How Will the Fed Rate Cut Affect Mortgage Rates?

Last Wednesday the Federal Reserve cut the interest rate for the first time since the 2008 financial crisis. The quarter percentage point drop puts the federal funds rate at around 2.25%, from about 2.5%. What does this mean for the housing market?

The 10-year Treasury yield generally has more influence over mortgage rates than the Fed rates, and since the yield was already lowered in 2019, there was not an anticipated drop again to coincide with the Fed rate dropping. This does not appear to be the case, however, as the 10-year Treasury yield dropped below 2% to 1.88% last Thursday, the lowest point since November of 2016. The reason for the yield drop seems to be associated more with the announcement by President Trump on Thursday that there will be more tariffs imposed on Chinese goods than the Fed rate drop, which was also the case back in May. And since mortgage rates dropped after the previous slide in the 10-year Treasury yield, we can anticipate another dop.

If you have been waiting to purchase a home or refinance at a lower rate, now is the time to do it. Contact the experts at NASB to help you get started at 855-465-0753.