It’s day two of mortgage rates surging higher–now back to the highest levels in 2 weeks (the day before the September 5th jobs report). The juxtaposition of yesterday’s Fed rate cut and the sudden mortgage rate spike is incredibly confusing to most of the population, so let’s clear it up.

SHORT VERSION:

• The Fed Funds Rate (FFR) doesn’t dictate mortgage rates
• The FFR only changes on Fed announcement days, 8 times a year.  It changes in response to various economic reports and events.
• Mortgage rates change daily and the bonds that drive mortgage rates change in real-time throughout the day.  That means mortgage rates can drop for all the same reasons that drove yesterday’s rate cut.
• Because those reasons were already in play well before yesterday, mortgage rates had already responded to them well before yesterday.
• Bottom line: the Fed Funds Rate and mortgage rates dropped for the same reasons, but mortgage rates got to do it sooner because they move more nimbly.

For a Free Mortgage Analysis please phone Dan Cassel and the Trinity Mortgage Loan Team direct at 866-310-1112 or emails danc@dansrealestateloans.com