Fed Drops Rates… Time to Refinance or Buy???
After 30 months and 11 straight increases in the Federal Funds Rate without a drop, the Fed FINALLY shifted gears and dropped their rate. What the media will lead you to believe is that all rates are automatically dropping by 0.50% including mortgage rates… which is NOT the case. Let’s explain…

The Federal Funds Rate is the overnight borrowing rate that banks and institutions pay to borrow money from the Federal government. The money is what the banks loan out on HELOCs (home equity line of credit), auto loans, credit cards, and other short-term loans. So, yes, your credit card or HELOC rate will see the effect of this drop within the next 30-60 days, but this doesn’t directly affect mortgage rates.
On the other hand, mortgage rates are based on the bond market which is affected by inflation which is affected by the Fed rate (borrowing costs). The market had expected this rate drop since the last Fed meeting in July 2024 but they were only expecting 25 bps. The surprise 50 bps drop actually shocked and sort of worried the market because a larger than expected drop by the Fed is typically warranted by a weaker than expected economy.
That’s not to say that mortgage rate aren’t going to drop, because we definitely believe this is the early stage of lower rates, but it’s not instant satisfaction.
If you have any questions or there’s anything we can help with, please give us a call at (248) 633-8555.
Also if you or anyone you know needs a purchase or refinance mortgage anywhere in the country, feel free to reach out. We are true mortgage advisors that will always look out for your best interest. We would love to help!
-Alex Kandah – National Mortgage Advisors
