Mortgage rates are influenced by inflation independent of the Fed rate cut.

The recent Fed rate cut is making noise in real estate today. However, there’s a lot of misinformation about it. To cut through the confusion, I talked with Trey DelGreco from Movement Mortgage to answer the most pressing question we have right now: What does the Fed rate cut mean for interest rates going forward?

The simplest explanation is that the Federal Reserve does not control mortgage rates. Even when the Fed’s interest rate was 0% a few years ago, this didn’t mean mortgage rates had to follow suit. Mortgage rates are influenced by inflation and are adjusted daily, independent of the Fed’s rate.

The Fed adjusts its interest rate every six weeks in response to inflation trends. Recently, inflation has been improving, which is one of the reasons why we’ve seen a decline in interest rates over the 90 days leading up to this rate cut. This rate drop is the Fed’s way of acknowledging that inflation is getting under control. It’s also the reason why you didn’t see an immediate drop in mortgage rates when the Fed rate cut happened.

“The recent rate drop is the Fed’s way of acknowledging that inflation is under control.”

When it comes to the question of where mortgage rates are going? No one can say for sure. Different factors, not just inflation, influence rates and are unique to each individual. This is where the value of getting pre-approved through a lender comes in. Your eligibility for a mortgage depends on your credit score, debt-to-income ratio, and other factors. 

Given these circumstances, should homeowners refinance their loans now? It all depends on your specific situation and goals. Every client is different and the only way to know if now is the best time to refinance is to first assess your situation. We can help you determine if refinancing is a good option for you. It’s also possible that refinancing is not necessary, and that’s perfectly fine, too.

If this is something you want moving forward, please call me anytime at (407) 499-8993 or send me an email at chris@mypinnaclehomes.com so we can discuss your options. You can also directly contact Trey DelGreco at (205) 401-6141 or trey.delgreco@movement.com if you have any questions about mortgages.