The Federal Reserve met this week and after the meeting, cut interest rates by .25%. The move had been anticipated by many investors prior to the meeting – however, in the last couple weeks, there was discussion that the Fed may not cut rates. So everyone was waiting to see what the Fed did and more important, what they said after the meeting!
Mortgage rates did increase a bit the end of last week, this week the market had been improving but many were waiting for today’s announcement. After the announcement, the bond market improved, then got worse and then rallied a little bit! Mortgage investors are watching and listening to see what the Fed is thinking.
The Fed is in a bit of a predicament. The economy is strong, the stock market is rising (most days!), employment is strong and the President is very vocal that he wants interest rates dropped as low as possible. The Federal Reserve is an independent body and pressure from the President shouldn’t affect the Fed’s decisions, but there is discussion that it is part of the Fed’s decision. The Fed is trying to keep unemployment low and inflation in check.
There are 10 voting members of the Federal Reserve Board, only 7 of them voted to drop rates by .25%. One did vote to drop rates by .50%. The others didn’t want to cut rates by .25%. This makes mortgage rates more uncertain in the future.
The other positive message from today’s announcement was that the Fed is open to more rate cuts – and maybe more in 2019. This means that there is a chance rates may improve a bit more but you never know for sure! We do know investors will look over the meeting minutes for more clues on what the Fed is thinking. That will affect rates in the future.
The reality is mortgage rates are great – if you are thinking about buying or refinancing, now is definitely a great time to do that!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
