Federal Reserve Statement Explained – November 2024

In a move that was widely expected, the Federal Reserve (Fed) lowered the target for the federal funds rate by 0.25% to a range of 4.5% – 4.75%. The market had been expecting this, so don’t anticipate any immediate movement with mortgage rates. But lower is better than higher, so that’s trending in the right direction.

Let’s get into what this means for you.

What This Means For Home Buyers

The first thing everyone needs to be aware of is why mortgage rates don’t necessarily fall in tandem with the federal funds rate. Mortgages are sold to investors up to a couple of months after you close. This means that markets price in anticipated rate moves starting about 60 days in advance.

Because of this dynamic, the only time waiting on the Fed actually makes a difference is when the market is surprised one way or another. And because the Fed does projections on a bunch of economic indicators including the federal funds rate at the end of each quarter, surprise rarely happens absent a major economic shift.

If you can afford the payment, that should be your focus as a home buyer. Assuming you keep your credit in shape, there’s always the opportunity to refinance if rates drop.

A trend toward lower rates would help with affordability. On the other hand, some sellers Might try to raise prices knowing that people theoretically have more room in the budget. Work with your real estate agent or any other advisors to make sure that the offer you make is competitive, but not overshooting comparable home values.

What This Means For Those Refinancing

If you’re refinancing, lower is always better. While it’s unlikely that mortgage rates are going to fall in the short term because this matches with market expectations, they also won’t be getting any higher based on this. So if you like the rates you see today to refinance or do a home equity loan, that represents an opportunity.

In addition to the payment, the other key thing to think about is whether you have enough equity to accomplish your goals. That’s true regardless of whether you’re doing debt consolidation or some sort of home improvement.

Whether a refinance of your primary mortgage or a home equity loan, if you’re looking to do debt consolidation, the rate is going to be lower than it would be for a credit card or personal loan because it’s secured by your home. This is a good argument for mortgage financing no matter the rate environment if you have the equity and a need for the funds.

If you’re interested in going over your options, we encourage you to apply online. One of our Home Loan Experts can help you determine the right move based on your situation.