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The Fed Rate Cut and Mortgage Rates
March 17th, 2020
The federal reserve announced a rate cut and here’s what that means:
Fed cutting rates is a short term overnight bank to bank lending rate which DOES NOT have a direct impact on mortgages.
This cut will lower rates on credit cards, home equity loans, auto loans and other consumer loans that are affected by the “prime” rate.
What does this mean for mortgage rates?
Could move mortgage rates lower but they could also go higher. If the stock market rallies on this news, it could actually cause long term rates (mortgages) to increase.
Mortgage rates are based on the MBS (mortgage backed securities) market - which is independent from the treasury bond as well as the stock markets but typically reacts within certain tolerances of the financial markets.
Your Wallick & Volk Trusted Advisor is available to answer all your questions. www.wvmb.com
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