The Federal Reserve announced this week that it was lowering its benchmark federal funds rate for the third time this year but hinted at a pause in further rate cuts for the time being. The policy statement released on Wednesday downplayed the need for further rate cuts in the coming months despite concerns of a slowing economy.
While changes in the federal funds rate is not directly tied to long-term rates like mortgages, it is often impacted by such changes. Fixed mortgage rates have fallen over one percentage point since last year and despite creeping up slightly last month, remain near historic lows. Because mortgage rates are already quite favorable to buyers, this week’s action by the Fed is likely to have little impact on fixed rate home loans.
However, variable-rate mortgages, as well as home equity lines are based on short-term rates and will be positively impacted by the rate cut.
Today, conforming no-point 30-year fixed mortgage rates are averaging 3.75 percent and 15-year rates are near 3.125 percent.
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