The Federal Reserve lowered the Federal Funds rate yesterday by .25%, ending their cycle of raising this key rate 8 times by .25% in the recent years. The latest move was in response to tame inflation numbers and a global economic slowdown that has been materializing.
However, they left us with uncertainty over future rate moves, as it appears, they will maintain their current “wait and see” demeanor about what actions they should take to both maintain a strong economy and keep inflation in check, moving forward.
Moves in the Federal Funds Rate only indirectly affect mortgage rates, but do have a direct effect on rates on HELOC’s which are mostly tied to the Prime Rate. The Prime Rate moves hand in hand with the Federal Funds Rate, so HELOC borrowers will immediately see rate and payment relief from the Fed’s recent actions.
The yield on the 10-year T-Bill has been drifting lower and lower in recent weeks in anticipation to this Fed softening, which is a real positive for mortgage rates. We are seeing the lowest mortgage rates we have seen in years.
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