The Federal Reserve cuts its benchmark interest rate for the third time this year, bringing it down to a range of 4.25% to 4.50%. While this move is intended to stimulate the economy, it's unclear how it will affect mortgage rates.
The Federal Reserve implemented its third consecutive rate cut of 2024 today (December 18), reducing its benchmark federal funds rate by 25 basis points. This decision lowered the Fed's benchmark rate to a range of 4.25% to 4.50%, down from its previous range of 4.50% to 4.75%. This December adjustment follows earlier cuts in September and November, when the Fed enacted reductions of 50 basis points and 25 basis points, respectively.
Since September, the federal funds rate has fallen by a full percentage point, a significant shift reflecting the Fed's evolving approach to supporting the economy.The Fed's December rate decision reflects growing confidence in the economy's trajectory and the continued moderation of inflation pressures, despite an uptick in the inflation rate over the last few months. The big benefit of Fed rate cuts is that they can help drive down the cost of borrowing, making lending products like personal loans and home equity loans more affordable — which can be a big boon for borrowers in today's higher-rate environment. But loan rate drops aren't guaranteed to occur across the board, and for homebuyers and homeowners alike, the Fed's latest rate reduction raises important questions about the direction that mortgage interest rates could be headed in. While any reduction in the federal funds rate typically generates optimism among borrowers, the relationship between Fed policy and mortgage rates is more complex than many realize. So what does this new Fed rate cut mean for mortgage interest rates?See what mortgage interest rate you could qualify for today.What the Fed's December rate cut means for mortgage interest ratesWhile borrowers may be hoping that the Fed's latest move helps to lower mortgage rates, the Federal Reserve's 25 basis point rate cut is unlikely to lead to a dramatic dro
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