As expected the Fed cut rates again yesterday by .25% , dropping the fed funds rate to 4.50%. While the immediate impact will be on HELOCs, credit card rates, auto loans, and savings accounts. You are unlikely to see benefit in the long-term mortgage rate world. The reason is as always these types of rate cuts historically have an inverse affect on mortgage rates.

More recently, it has been the whispers of inflation and the monthly new non-farm jobs report having the biggest impact on mortgage rates. The Fed spoke yesterday about inflation and it wasn’t helpful to mortgage bonds. They spoke about how the readings on core inflation have improved modestly this year, however, recent increases on energy and commodity prices have put upward pressures on inflation.

After this was released the mortgage backed securities (driver of the mortgage rates) dropped immediately while stocks rallied. Friday is the jobs report, so it will be interesting to see what numbers come out. We could see this cause mortgage rates to improve slightly or get worse depending on how those job report numbers fair.

Not to fret, we are still sitting at mortgage rate levels that rival the lowest seen in the last two years. If you are thinking you need to refinance or are looking to buy give me a call so I can preform a goal analysis of your finances and determine the route you should take with your next mortgage.

~Ray

(303)779-0591 x2