When Fed cuts the rates my office is swamped with borrowers who are calling to see if they can get a better rate. Many of them are surprised that Mortgage Rates went up instead of down. Luckily, I always lock rates as soon as I can. To me as a mortgage professional, predicting the direction of the rates is not a game. Most mortgage professionals are not bond analysts. More importantly, I've been in the business long enough to see rates go up 6 times in 1 day by a total of 1.5%.
Let me shed some light on this subject:
The reason why mortgage rates go up when Fed cuts the rates is pretty simple. There is absolutely NO relationship between rates controlled by Federal Reserve and mortgage rates. Only very inderect relationship.
The Federal Reserve controls the rates they charge banks to borrow money and the rates banks charge when loaning money to each other for very short terms. These rates sometimes directly have an effect on credit card rates and Home Equity lines of credit. However, these rates have no effect on regular 30 Year Loans or FHA loans. Fed rates are linked to short term bond. However, mortgage rates are linked to longer term bonds. The most popular index is 10 Year Treasury bond. You can actually go on internet and trace that index using any financial websites.
Mortgage rates are somewhat lagging behind Fed rates and might eventually get lower. However, that could take a while. Immediate impact is almost always the increase of mortgage rates when Fed cuts the rate. Later on the rates usually return to where they were and might eventually fall.
So there you have it.
Who is the next person you know who is looking to purchase new or refinance their existing home in Palm Coast, Ormond Beach, Daytona Beach, Orlando, Miami, St. Augustine or anywhere in Florida. I also can help customers from New Jersey, Tennessee, California, Georgia, Arkansas, Colorado, Illinois, Indiana, Iowa , Kansas, Michigan, Missouri, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Wisconsin.
I proudly serve Palm Coast, Flagler County Florida Waterfront and Golf Communities, Hammock Beach, Hammock Dunes, Ocean Hammock, Cinnamon Beach, The Conservatory at Hammock Beach, The Gardens at Hammock Beach, Yacht Harbor Village, Grand Haven, Palm Coast Plantation, The Sanctuary, The Tidelands, Canopy Walk, Oceanside Luxury Condos, European Village, Palm Coast Resort, The Surf Club, and More!