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:
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Buying a new home with the increased purchasing power that comes with lower interest rates.
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Refinancing to eliminate mortgage insurance or to get a lower interest rate.
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Consolidating debt.
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Financing home renovations.
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Leveraging home equity to fund educational or other major expenses.
What does the Fed rate have to do with the housing market and economy?
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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.
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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.
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Short - term debt (like credit cards) typically see an impact when the Fed makes rate adjustments.
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Lowering the rate to 1.75 - 2.00% supports the Fed's mission to foster maximum employment and price stability.
