Concerns About Interest Rates
The Federal Open Market Committee announced that they have once again lowered the Federal Funds Rate!
How does a rate cut impact home buyers and home owners?
The Fed does not directly set mortgage rates; however, mortgage rates are historically low! Home buyers or home owners with specific needs and circumstances could benefit from today's great rates by:
-
Buying a new home with the increased purchasing power that comes with lower interest rates.
-
Refinancing to eliminate mortgage insurance or to get a lower interest rate.
-
Consolidating debt.
-
Financing home renovations.
-
Leveraging home equity to fund educational or other major expenses.
What does the Fed rate have to do with the housing market and economy?
-
The Fed does not decide mortgage rates, but it can indirectly influence them since the Fed's decision is based on driving a healthy economy.
-
Mortgage rates are hard to predict and are more closely tied to mortgage backed securities, but the Fed rate can impact adjustable rate mortgages and home equity lines of credit.
-
Short - term debt (like credit cards) typically see an impact when the Fed makes rate adjustments.
-
Lowering the rate to 1.75 - 2.00% supports the Fed's mission to foster maximum employment and price stability.