October 2019 Fed Meeting lowers benchmark rate by 0.25%
As expected, the Federal Reserve cut its federal funds rate by 0.25% during its October 2019 meeting. It’s the third cut in as many meetings.
What does that mean for your mortgage rate if you are shopping to buy or refinance a home?
If you have a mortgage already, or have locked in, you won’t be affected.
But if you’re still shopping for a rate, it’s time to monitor the situation.
Mortgage rates are dropping after the announcement. Markets were already expecting a rate cut, so it’s a bit of a surprise that mortgage rates are dropping further.
If you’ve been looking for a good time to lock in, this might be it.
No easy decision to cut rates
The Fed was divided on whether to issue another rate cut.
Just eight of 10 voting members wanted to cut rates at this meeting. Two wanted rates to stay put.
The argument to skip the rate cut is strong. The stock market is at all-time highs, unemployment at 50-year lows, and the economy appears unstoppable.
The fact that 20% of voting Fed members don’t agree with a cut signals that future cuts might not materialize.
It’s a small miracle that the Fed has cut rates this far. Just a year ago, everyone expected rate hikes in 2019. But mid-year, the group changed its tune and started entertaining the notion of lower rates, not higher ones.
So as a mortgage rate consumer, what should you do?
It’s already starting to feel like low rates are on borrowed time. In 2020, it’s quite possible rates could rise as the Fed begins to tighten policy. If you’re in the market for a mortgage, it may not be a good time to gamble on even lower rates in the future.
These rates could be the best we see for a long time.
Lock in low rates in the wake of the Fed meeting
Mortgage rates are at around the best levels in nearly a week following the Fed meeting.
Lock in your mortgage rate while markets are reviewing the data. Market sentiment can change quickly, so don’t wait to lock if you have found a rate you like.