Michael RushReal Estate Broker, Keller Williams Realty DTC · Real Estate Broker at Keller Williams Realty DTC

The Fed reduced the Funds rate by 50 basis points this week & our Fall selling season is heating up

22 Sept 2024 · 1 min

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In this brief commentary, the speaker explains that the Federal Reserve has lowered the federal funds rate by 50 basis points—the first reduction since 2020. While this cut does not directly halve mortgage interest rates, there is a strong correlation between the Fed funds rate and mortgage rates. The speaker notes that mortgage-backed securities (MBS) and the investors who trade them have been anticipating the Fed’s move, leading to a gradual decline in mortgage rates over the past two weeks.

Chapters

The Federal Reserve reduced the Fed funds rate by 50 basis points this week, and it was the first reduction since 2020. Now, this doesn't mean that mortgage interest rates dropped by half a percentage, but mortgage rates and the Fed funds rate have a close correlation. Mortgage interest rates are strongly impacted by mortgage-backed securities, and investors that trade these stocks and bonds have already been anticipating that the Fed would reduce rates. So we've been seeing movements in the mortgage interest rates for the last 2 weeks, and those rates have been coming down. And