Financial Information
When will the Fed’s rate cut be reflected in mortgage interest rates that one can obtain?
Does anyone know how long it takes before we will see the 3/4 and 1/2 point rate cut reflected in the mortgage interest rates?
Thanks
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#2 written by jon b 1 year ago
Conventional mortgage rates are long term debt instruments and the Fed Funds rate is for short term debt instruments – therefore they don’t necessarily go hand in hand. Mortgage rates are based more on the 10 year treasury yield and the perceived rates of inflation. 10 year was up a touch today.
If you are looking at things like Home Equity Lines of Credit, car loans, credit card rates – those usually have in the contracts a reset at a certain time of the month and will likely be reflected in the next full billing cycle.
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It could take a month or two before you see the impact of the drastic rate cuts that the fed has made in the past 9 days. Mortgage interest rates are not tied to the fed funds rate, so the impact is not felt immediately. But, we should see rates decline to around 4 percent over the next 12 months. With housing prices dropping as well, it is a good time to buy a home.