You’ve probably heard that the Federal Reserve, also known as the Fed, cut interest rates to zero on the Fed funds rate. There’s a common misconception that the Fed rate matches mortgage rates. Although the Fed rate was dropped to zero, this unfortunately does not mean that mortgage rates are also zero. A Fed rate cut does not equal lower mortgage rates every time. Here’s why…
How Mortgage Rates Differ
There is a big difference between the Fed funds rate which can change day to day and a mortgage rate that can stay in place for 30 years. Mortgage rates are normally based on mortgage-backed securities, which have done very well in bringing mortgage rates to historically low levels. But recently, the turmoil in the financial market has caused mortgage rates to rise a bit even though the Fed has cut its rate. However, depending on when you last obtained your mortgage, rates may still be lower than your current rate.
Ways to Save Money
I believe that there may be an opportunity to consolidate your debts, reduce years on your mortgage, and create wealth all by keeping or reducing your current monthly payment. Feel free to contact me with your questions or to learn more about how we can help you save money in this current financial market. With so many changes occurring these days, I can help you understand your options as it relates to your current mortgage, including whether refinancing makes sense for you right now.
More on Why Fed Rate Cut Does Not Equal Lower Mortgage Rates
If you’d like a more detailed explanation on why a Fed rate cut does not equal lower mortgage rates, I am happy to discuss it with you. I am also available to assist with all of your mortgage needs. Feel free to reach out to me. Although our office is not accepting walk-ins due to Coronavirus precautions, I am continuing to work and assist customers remotely and using virtual meeting tools.