Fed drops rates for the first time this year
As widely expected, the Federal Reserve announced a quarter-point cut to interest rates after its two-day September meeting that ended Wednesday. The lowering of interest rates comes after a hold on any interest rate changes earlier this year. The federal funds rate is now set in the 4%-to-4.25% range. This rate change came with indications of two more potential rate cuts coming this year. With only two more meetings scheduled in 2025, for October and December, each could come with their own interest rate cuts.
A statement released after the meeting outlining the thinking behind the cut said: “Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.”
What does this mean?
The announcement from The Fed means that the cost to borrow money, including for mortgages, could be lower for the first time this year.
The initial market reactions were mixed on Wednesday. The bond market showed some gains and some losses, while the stock market rose slightly after the announcement.
How does this affect homeownership?
The Fed’s decisions on interest rates can influence almost every aspect of the economy. Before this Fed meeting and interest rate cut, mortgage rates had dropped to a three-year low. It doesn’t mean the two are directly related, but interest rates do affect the bond market, which in turn does influence mortgage rates.
Mortgage rates now sit at 6.17% for a 30-year fixed rate mortgage. This is a sizeable drop from where mortgage rates were at just before the last Fed meeting. On July 29, rates for a 30-year fixed rate mortgage were 6.735%.
But don’t wait to buy a home on the chance that rates might drop later in the year. Even if the Fed continues to cut interest rates later this year, that doesn’t necessarily mean mortgage rates will follow. If rates drop after you get your mortgage, you can always refinance so your loan matches current rates.
The team at OriginPoint is here to help you navigate a tricky housing market. If you have questions, we have team members available to support you. Also, if you know you need to start the homebuying process, we can assist you in getting a mortgage pre-approval.
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Refinancing your mortgage may increase costs over the term of your loan. Restrictions may apply.
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Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact OriginPoint for current rates and for more information. All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. OriginPoint LLC fka Guaranteed Rate Affinity, LLC does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by OriginPoint LLC fka Guaranteed Rate Affinity, LLC. OriginPoint LLC fka Guaranteed Rate Affinity, LLC its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action. OriginPoint does not provide tax advice. Please contact your tax adviser for any tax related questions.
