Rates at All-Time Lows No Thanks to Fed’s Emergency Cut

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Posted To: Mortgage Rate Watch

This is mostly a reprint of a piece I wrote earlier today for the MBS Commentary channel. If you read that one, you’ve basically already seen what follows The Fed announced an emergency rate cut of 50bps today (0.50%). Great! So your mortgage rate could be 0.5% lower, right? Not exactly… Rates definitely moved lower today, and the Fed was definitely involved in that, but more so because their surprise rate cut proved to disillusion financial markets, thus setting off a wave of panic that benefited bonds. Excess demand for bonds means lower mortgage rates (all-time lows, by the end of the day). The fear among market participants was that a surprise cut such as this would sooth markets and actually put upward pressure on mortgage rates. Yes, I just said that a 0.50% drop in the Fed Funds Rate…(read more)

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