For the second time in three months, the Federal Reserve cut its key interest rate on Thursday. The interest rate is now in a range between 4.50% and 4.75%, 75 basis points lower than on September 1st. And if inflation continues to fall, it could fall even further when the Fed reconvenes in December for its final meeting of 2024. But that’s not good news for savers accustomed to high interest rates from select providers Savings accountsThis is generally good news for borrowers who have had to pay more for mortgages, credit cards and more.

Mortgage interest ratesIn particular, they rose sharply last year Highest value since 2000 but have since fallen along with inflation. But the road back down has been bumpy in the last few weeks. So what does this latest Fed rate cut mean for mortgage rates? We’ll go into this below.

You can find out what mortgage interest rate you are currently receiving here.

What the Fed’s rate cut means for mortgage rates

In short, Thursday’s rate cut, welcome as it is, is unlikely to have a positive impact on mortgage rates. Here’s why:

It was only a 25 basis point cut

Before September’s larger-than-expected cut of 50 basis points, Mortgage rates fell to a two-year low. That gave willing homebuyers and some homeowners looking to refinance an opportunity to take advantage of some savings opportunities. But this week the cut was just 25 basis points. That’s certainly a step in the right direction, but not significant enough to result in a huge reduction in mortgage rates. And because lenders consider multiple factors when making mortgage rate offers – not just the federal funds rate – it’s unlikely that mortgage rates will even fall by the same percentage as the federal funds rate.

See what mortgage rates are available after the Fed cuts rates again.

It was priced in by the lenders

Homebuyers who checked mortgage rates on Monday this week and then checked again after the Fed meeting may have been surprised to see the same or slightly changed rate offering. That’s probably because lenders had already priced in today’s cut. This is a common occurrence as lenders monitor the market and make adjustments to their interest rates accordingly. For this reason You should check mortgage rates daily for the opportunity to benefit from a below-average interest rate.

Other factors offset these cuts

There was no Federal Reserve meeting in October. And yet mortgage rates rose by more than a point during the month. Why is that? That’s why Other factors affect mortgage interest rates Aside from what the Fed does (or doesn’t do). And some of these other factors like that unemployment And inflation The federal funds rate can and often does offset the Fed’s formal rate cuts. The Yield on 10-year government bonds also plays a crucial role in the development of mortgage interest rates. So while a Fed rate cut will theoretically help lower mortgage rates, there are often much more complicated factors that drive rates higher.

The end result

A Fed rate cut is only part of the equation for borrowers looking to lock in a low mortgage rate. However, waiting for the ideal time to buy brings with it a number of problems Complications. So in today’s market, it may be worth buying now, especially if you can find it Dream houseAnd Refinance at a time when interest rates have finally fallen to a level you are comfortable with.

Learn more about your current home buying options online.