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How are mortgage rates affected by the Fed. rate cuts? First it depends on how the bond
market reacts to the cut. Mortgage
rates are more affected by the economy than by a rate cut by the Fed. As the economy weakens, investors pour
their money into the Bond Market which results in higher bond prices and
therefore reduces the yield (interest rate) on bonds. This results in lower mortgage rates. Usually when the Stock Market has a bad day
the Bond Market improves because investors move money out of stocks and into
bonds. Don't wait for rates to go lower. The biggest mistake made is trying to
time the mortgage rate market. It's similar to trying to time the stock
market and we know how difficult that is.
Rates will not stay low forever so the best way to get a low rate is
to submit your
loan application so that you can take advantage
of rates when they are close to the bottom. |
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