As predicted, the Federal Reserve cut the interest rate by a quarter point today, bringing the interest rate from 4.75% to 4.50%. This is the second rate cut this year. 

As we saw in September when the Federal Reserve cut the rate down to 4.75%, there was no immediate benefit to consumers hoping to see lower mortgage interest rates. Instead, the interest rates went slightly up in the days following the rate cut and then lowered a couple weeks later. The only loan product immediately reflecting the rate cut was the HELOC (Home Equity Line of Credit).  Mortgage interest rates take longer to reflect the rate cut. Explaining this, John Smyth, President of First California Funding in San Diego said, "It doesn't usually happen immediately because with the rate cut the stock market usually increases taking money out of the bond market, which actually increases rates for a time."

                                                                                                                               Dollar Sign

With today's rate cut, what can consumers expect?

Consumers will be able to look forward to future decreases in the interest rates. Smyth explained that, "Normally, the rate cut show up to consumers over the period of a couple weeks.  But, some of the recent earnings reports indicate that the rates should improve faster." 

So we should see rate cuts sooner than expected. Great news for people hoping to buy a home or refinance! 

To get additional information about loan rates and the recent rate cut, contact John Smyth directly at 858-654-4063 or jsmyth@fcfunding.com. As always, feel free to contact me with any questions that you have. 

 

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Deborah-hires

Deborah Engel, San Diego Homes & Property

San Diego, CA

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Prudential California Realty

Cell Phone: (858) 829-1989

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San Diego real estate discussion. MLS updates, property and market analysis. First time homebuyers, relocating homeowners, selling and buying homes.


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