The Fed just dropped the Fed Funds Rate to 3.00%. Great news if you have a HELOC. Prime will now be reduced to 6.00% and home equity lines of credit are based on the Prime Rate. The Prime Rate = Fed Funds Rate plus 3 points. The Fed also reduced the Discount Rate to 3.5%.
The market is currently rallying…I’ll let you know if mortgage rates adjust with the rallying market with an update to this post. I hope you locked in your rate!
The Fed is leaving the door open for future rate cuts:
Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
We still have big time economic indicators that historically impact mortgage rates scheduled for the rest of the week: Thursday’s PCE and Friday’s Job Report.
As always, I advise locking your interest rate if you’re closing within the next 30 days.