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Could a Fed Mortgage Rate Cut Lead to Rate Cuts?

Could a Fed Mortgage Rate Cut Lead to Rate Cuts?

If you’re considering buying a home or refinancing your mortgage, it’s helpful to know how mortgages are affected by the federal funds rate, especially with an interest rate cut expected at the September meeting next week. First, the Federal Reserve, or “the Fed,” is the central bank of the United States. Its job is to manage the money supply and the cost of credit so that the U.S. economy can thrive. It also sets the federal funds rate, which is the interest rate that banks charge each other for short-term loans, which directly affects the price consumers pay when they borrow money.

The Fed also influences mortgage rates, but does not set them. Instead, mortgage rates are affected by factors such as inflation, job growth, whether the economy is slowing or growing, etc. The Federal Reserve’s monetary policy is also a factor.