Mortgage Rates fail to react after FED Rate Cut

Happy Friday and Happy Halloween from Local Mortgage!

Another FED meeting in the books, but once again, mortgage rates fail to drop after the FED lowers the federal funds rate. We will end the week still at 5.875% for our best 30-year fixed conventional scenario.

As expected, the Federal Reserve board lowered the federal funds rate by .25% on Wednesday. The bigger news came during the press conference where Chairman Powell commented that December rate cuts were far from a sure a thing and that some FED officials have widely differing views as to how to proceed with future monetary policy. You may remember from the September meeting’s minutes that there were some FED officials that were not in favor of September rate cuts, so it seems there are still some officials that are still on the fence. Prior to Wednesday’s meeting, investors were pricing in approximately a 90% chance of a December rate cut so we saw some pullback after Chairman Powell’s comments.

Another piece of commentary was more positive for mortgage rates as Chairman Powell said that their bond portfolio of approximately 6.6 trillion is likely appropriate going forward. As a result, the FED will resume purchasing bonds to replace maturing ones, although the mix of treasuries and mortgage-backed securities may shift over time.  

Next week will be another light week as investors will be relying on available private data as the government shutdown continues. The Institute of Supply Management will release its manufacturing index on Monday and its services index on Wednesday.

Hope everyone has a great weekend and a fun Halloween night! Thank you for reading!