How does this rate cut impact home buyers and owners?
Even though the Federal Funds Rate does not directly impact mortgages, rates are historically low! Home buyers – or home owners with specific needs and circumstances – could benefit from today’s great rates by:
- Buying a new home with the increased purchasing power that comes with lower rates.
- Refinancing to eliminate mortgage insurance or to get a lower rate.
- Consolidating debt*.
- Leveraging home equity to fund home renovations, educational costs, or other major expenses.
- The Fed sets rates with a goal of creating an economic environment that promotes maximum employment and price stability.
- Mortgage rates are hard to predict and are more closely tied to mortgage-backed securities, but the Fed rate can impact adjustable rate mortgages and home equity lines of credit.
- Short-term debt (like credit cards) typically see an impact when the Fed makes rate adjustments.