NeWS to KnOW

The Federal Reserve is scheduled to meet this week and announce its new Policy Statement and Interest Rate Decision Wednesday...and will cut the Fed Funds Rate once again. This is no big surprise. Throughout 2008, the Fed has lowered key interest rates in an effort to stimulate the economy – including cuts in its Fed Funds and Discount Rates earlier this month in an unscheduled meeting. As we know however, cuts in these interest rates do not translate into lower home loan rates. In fact, they typically move in the exact opposite direction.

That's the reason I wanted to share this information with you today. If you want to secure a lower mortgage rate, the best time to act could be before the Fed meets and announces its latest cut.

In the chart below, notice the pink line. That line represents the interest rate the Fed impacts with its financial policy. As you can see, the line has been consistently lower since January. The blue line, which represents 30-year fixed-rate mortgages, shows that mortgage rates have risen since the first Fed rate cut announcement.