Fed Rate Cut - Should You Refinance?

Today the Federal Reserve cut rates .25%. While this doesn't necessarily translate into lower mortgage rates, it will reduce rates on most home equity lines of credit and credit cards.

Generally speaking, most Fed rate cuts put pressure on mortgage rates and can actually lead to higher rates. So why did mortgage rates react favorably to today's news of the fed cut? Mortgage rates reacted favorably because the market was expecting a .50% cut not the .25% cut that it received. Because this is lower than what was expected, mortgage backed securities (how mortgage rates are set) have seen a nice rally this afternoon.

So do you lock or refinance now? Based on the market this afternoon, chances are rates on Wednesday will look better than those on Tuesday. Keep in mind the rally may be short lived as we recently saw with rates taking a dip within the last couple of weeks only to make a strong move up the end of last week. While I expect rates will look better tomorrow, I am not sure we will get back all of what we lost the last couple of weeks. So what should you do? As always, my job is to help you understand the risk of locking vs. not locking. If your in the market for a mortgage now, whether you are buying or refinancing, now is the time to make sure you connect with our team.

In February, Fannie Mae and Freddie Mac are imposing a new set of fee's that will effect a large percentage of mortgage borrowers. If you close on your loan before February 15 you are not subject to the new fees. So now more than ever is a good time to take a serious look at your mortgage options.

As always my team and I offer a no-cost, no-obligation review of your current mortgage. If refinancing makes sense, we will show you how to get the best deal. If it doesn't, we will show you why you shouldn't do it now. If you have friends or family members looking to refinance now is a great time to get them in touch with us.

That's it for now, look for more regular updates soon.