Hello Friends, here’s my market rates email list update for August 2019.
Federal Reserve Rate Cut
The Federal Reserve did cut their target rate .25% yesterday, July 31st, as anticipated. They also ended their balance sheet reduction plan two months early than they had previously indicated.
Mortgage Rates Lowest in Over 2 Years
The end result of the Fed actions is that the bond market has been doing very well the last two days and mortgage interest rates have fallen almost 1% from where they were at this time last year. We did not see the big move in the bond market yesterday, but today’s follow up is seeing both the 30-year treasury and the 10-year treasury fall to their lowest levels in more than two years. This bond yield reduction is causing mortgage rates to fall to their lowest levels in more than two years as well.
Drops May Be Short Lived
Although the Fed is working to suppress interest rates and help prevent our economy from going into a recession, these rate cuts may be short lived. The Fed cited global concerns and muted inflation for their reasoning on the cut. On forward guidance, the Fed said that they would act as appropriate to sustain the expansion. During Fed Chair Powell’s question and answer session he said “We are thinking of it as a midcycle adjustment to policy,” which the market is taking as potentially a one and done cut, and not additional cuts. He also said that this cut is different from the start of a lengthy cutting cycle. The market reacted negatively to this, but then Powell backtracked and said that the Fed is not committing to this being a one and done cut or a string of cuts.
Mortgage Loan Refinance Opportunity
Mortgage refinance applications are