The Federal Reserve just made another emergency cut to the Federal Funds Rate, but it may not be clear how this will affect you. Below are things that you need to know:
- The Federal Reserve does not control mortgage rates.
- The Federal Reserve sets the Federal Funds Rate and Discount Rates. These are the costs for overnight loans from bank to bank or from the Federal Reserve to member banks.
- When the Fed’s cuts their rates, mortgage rates can actually rise.
- Lower Federal Reserve rates can be good for stocks, so investors often sell mortgage bonds to raise cash for stock investments.
- When bond prices fall, mortgage rates rise.
How does this affect you? Last week was a bad week for rates, but I believe this was a market overreaction to the massive influx of refinance applications that were submitted. With this new Federal Rate Cut announcement, there is a good chance we will get back to the lower rates of the previous week. We are optimistic things will settle again soon.
I’m always monitoring the markets to know what’s happening with mortgage rates, and keeping my customers protected is my number one goal. With that in mind, here is what you should be doing to be ready for a drop in rates:
- Get your application in NOW. Click ‘Apply Now’ in this link to get started: Online Questionnaire
- Start gathering required documents that are listed in the ‘Apply Now’ link above.
- When you receive the request to send in Loan and Income Documents – Get them in ASAP!
Most Importantly, Be Armed & Ready for us to lock your loan rate in.
Call or email with any questions. I’m here to help!
Retail Producing Branch Manager
Cardinal Financial Company, Limited Partnership