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Fed Delivers Significant 0.50% Rate Cut, Largest Since 2020

Fed Cuts Interest Rates: What It Means For You

  • Significant Rate Cut: The Federal Reserve has lowered its key interest rate by 0.50%, the biggest cut since March 2020.

  • Former fed funds range: 5.25-5.50%
    New range: 4.75-5.0%

  • Impact on Mortgage Rates: Mortgage rates initially improved but then rose slightly due to revised Fed forecasts for future cuts.

  • Reason for the Cut: The Fed is aiming to balance inflation and employment, and prevent negative economic impacts of high rates.

  • Future Rate Cuts: The Fed projects significant rate cuts over the next 16 months.

  • Should You Buy or Refinance? Current rates are favorable for home buyers. Homeowners with 7.0% + interest rate might consider a low cost loan option to get immediately relief with a rate around 5.75%. Homeowners can refinance to the lowest rates over the next 16 months during the Feds rate cut period.

Fed’s Historic Move

  • The Fed cut its key interest rate by 0.50%, the largest reduction since March 2020.

  • This decision was driven by recent weaker economic reports and a desire to balance inflation and employment.

Mortgage Rate Reactions

  • The market had already priced in some of the larger 0.50% cut.

  • The Fed’s revised forecasts for future cuts in 2025 caused the slight increase in mortgage rates. Markets were expecting bigger cuts in 2025.

  • Despite the slight increase, rates are still much better than they were weeks ago.

Why The Fed is Cutting Rates Now

  • The Fed is aiming to balance inflation and employment.

  • The previous strategy of raising rates to combat inflation was successful.

  • The Fed is now focused on preventing negative economic impacts of high rates.

Future Rate Cuts and Mortgage Rates

  • The Fed projects further cuts in 2024 and 2025. Possilby 0.25% on November 6-7 and 0.25% in December 17-18

  • Furthermore, the Federal Open Market Committee (FOMC) anticipates an additional decrease in the federal funds rate ranging from 1.0% to 1.25% over the course of 2025.

  • Experts predict that mortgage rates could settle in the high 5s or low 6s starting in 2025.

  • Rates could go lower or higher, but it is likely they will fluctuate.

Is it Time to Buy or Refinance?

  • Current rates are favorable for home buyers.

  • Homeowners with 7.0% + interest rate might consider a low to no cost loan option to get immediately relief with a rate around 5.75%. Homeowners can refinance to the lowest rates over the next 16 months during the Feds rate cut period.

Major Agency Forcast

Housing Authority Forecast
Fannie Mae 6.2% by Q1 2025
National Association of Home Builders 6.14% for 2025
Wells Fargo 5.96 by Q1 2025
Mortgage Bankers Association 5.9% by Q4 2025

The Home Loan Source is offering a low cost refi to provide immediate relief to homeowners with 7.0% interest rates. Call us today at 714-352-0808 to get a free quote today.

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Mortgage Rates Disclosures

 

The advertised loan is a 15-year Fixed Rate Loan with a 15-year fully amortizing term. The interest rate is 5.250% for 180 months. The disclosed APR is based on the payment of 3.000 discount points. For a $726,200 loan, there is a 5.755% APR with a monthly principal and interest payment of $5,838 for 180 months. Interest rate quoted assumes a purchase with 45 day lock pricing at 60% loan-to-value (LTV), a minimum FICO score of 740 on a primary residence. Interest rate quoted assumes a purchase of a primary residence. The actual interest rate, APR and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Lender. Not available in all states. Payments shown do not include taxes or insurance, actual payment obligations will be greater. Not all applicants will qualify. Rates and terms are effective 9:00AM PT on 9/18/2024 and are subject to change without notice.


The advertised loan is a 30-year Fixed Rate Loan with a 30-year fully amortizing term. The interest rate is 5.250% for 360 months. The disclosed APR is based on the payment of 3.000 discount points. For a $726,200 loan, there is a 5.545% APR with a monthly principal and interest payment of $4,010 for 360 months. Interest rate quoted assumes a purchase with 45 day lock pricing at 60% loan-to-value (LTV), a minimum FICO score of 740 on a primary residence. The actual interest rate, APR and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Lender. Not available in all states. Payments shown do not include taxes or insurance, actual payment obligations will be greater. Not all applicants will qualify. Rates and terms are effective 9:00AM PT on 9/18/2024 and are subject to change without notice.

The advertised loan is an FHA 30-year Fixed Rate Loan with a 30-year fully amortizing term. The interest rate is 5.250% for 360 months. The disclosed APR is based on the payment of 3.000 discount points. For a $726,200 loan, there is a 6.437% APR with a monthly principal and interest payment of $4,010 for 360 months. Interest rate quoted assumes a purchase at 80% loan-to-value (LTV), a minimum FICO score of 740 on a primary residence. The actual interest rate, APR and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Lender. Not available in all states. Payments shown do not include taxes, hazard insurance, or mortgage insurance; actual payment obligations will be greater. Not all applicants will qualify. Rates and terms are effective 9:00AM PT on 9/18/2024 and are subject to change without notice.

This is a VA program. Current guidelines for VA Financing can be found at https://www.benefits.va.gov/homeloans/index.asp . The advertised loan is a VA 30-year Fixed Rate Loan with a 30-year fully amortizing term. The interest rate is 5.250% for 360 months. The disclosed APR is based on the payment of 3.000 discount points. For a $726,200 loan, there is a 5.882% APR with a monthly principal and interest payment of $4,010 for 360 months. Interest rate quoted assumes a purchase with 45 day lock pricing at 100% loan-to-value (LTV), a minimum FICO score of 740 on a primary residence. The actual interest rate, APR and payment may vary based on the specific terms of the loan selected, verification of information, your credit history, the location and type of property, and other factors as determined by Lender. Not available in all states. Payments shown do not include taxes or insurance, actual payment obligations will be greater. Not all applicants will qualify. Rates and terms are effective 9:00AM PT on 9/18/2024 and are subject to change without notice.

Refinance: By refinancing your existing loan, your total finance charges may be higher over the life of the loan.