The Fed Rate Cut vs. Mortgage Rates

November 5, 2019
Posted in Programs
November 5, 2019 derekevansteam

Mortgage rates are ticking up slightly—and it goes to show how the Federal Reserve’s policy can have a somewhat limited effect on the mortgage market.

Despite the increase, the rate on the 30-year mortgage remains over a full percentage point lower than at this same time a year ago.

That mortgage rates rose even though the Fed just announced yesterday its plans to cut interest rates. So what gives? When the Federal Reserve adjusts interest rates, it is influencing short-term rates. Mortgage rates, on the other hand, are longer-term interest rates. They generally track the direction of the 10-year Treasury note. The 10-year Treasury yield rose in advance of the Fed’s decision, though it has moved lower since.

Other factors also influence the rates that mortgage lenders offer consumers. Like consumer spending, which has remained strong recently as a reflection of the healthy job market.

Purchase activity continues to show strength, indicating home-buyer demand. Long story short, rates are still near historic lows and it’s a great time to buy or refi!

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