Rebecca Stiles a local mortgage lender at Waterstone Mortgage explains what the rate cut means for you.

Here is an easy read on the current situation….

Fed just announced a .5% rate cut and since I just got a ton of emails and texts, here’s what that means…

-Fed cutting rates is a short- term overnight bank to bank lending rate, does not have a direct impact on mortgages
-it will lower rates on credit cards and home equity loans

It “could” move mortgage rates lower, but they could also go higher on the news. If the stock market rallies tomorrow on this news, it could cause long term rates (mortgages) to increase.

What is missed in the headline as it pertains to mortgage rates is the Fed starting another round of Quantitative Easing (QE). QE is when the Fed infuses cash into the economy in the form of purchasing assets, in this case Treasury and Mortgage Bonds. The degree to which QE is used to purchase Mortgage Bonds (MBS) will determine if and by how much rates come down.

The market is more volatile than I have seen since the financial crisis, rates went up and down .75% last week which is unheard of.

Last point, the question often gets asked if I lock and rates go down, can I “un-lock?” Quick answer is most likely not. When a lender locks a mortgage rate, they buy an MBS to guarantee that rate. Like buying a stock. So, until I can go back in time and sell all my stocks two weeks ago before the market crashed, we can’t unlock a locked in rate.

Feel free to contact Rebecca at Waterstone Mortgage for more information!