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Rates are cut....What does that mean? It happened again. The Fed cut policy rates by a quarter percent at their October meeting, the third cut in a row. Fed statements hinted that additional cuts are unlikely as we move into 2020. Keep reading for some background and potential action items.... Who is the Fed? The Federal Reserve Board (the Fed), controls the Fed Funds Rate and the Discount Rate. These are charges for overnight loans from bank to bank or from the Fed to member banks. Why cut policy rates nowand why not later? The rate cut is an effort to bolster the economy, which has recently experienced moderate growth and record unemployment but has also shown some troubling signs. Post-meeting statements indicated the three cuts should be enough, putting a pause on future cuts unless unforeseen developments require a reassessment. What does a cut mean? It could cause banks to reduce their prime rates, which are often used to calculate interest on consumer products like credit cards, private student loans, and home equity lines of credit (HELOCs). Adjustable Rate Mortgages (ARMs) may be directly impacted as well. Fixed mortgages are typically based on long-term rates, which are not directly affected by Fed rate changes. However, Fed policy does influence mortgage rates. There are exceptions, yet home loan rates will typically follow overall interest rate trends over time. What now? With further policy rate cuts unlikely and the end of the year approaching, now is a good time to review your existing mortgage loans and consider the timing of future loans. Let’s schedule a time to chat before the busy holidays or even put something on the calendar for January. Just reply to this email with a good time for you, and we’ll set something up. Thank you for allowing me to provide you updates on industry news. I look forward to hearing from you soon.