What the rate cut means for home loans

This past Tuesday, the Federal Reserve cut interest rates by .75%! That's the biggest cut since 1984. This is great news if you have a credit cards, car loans, an adjustable rate mortgage, or a home equity line of credit. For long-term rates, however, this could mean the beginning of the end of the lowest rates since 2005. Let’s look at the impact of a few recent Fed Funds Rate cuts and the corresponding impact to home loan rates to see what this could mean for you:

January to June 2001: Federal Rate Cut 2.25% Home Loan Rate Rose 0.10%

October to December 2001: Federal Rate Cut 0.75% Home Loan Rate Rose 0.45%

May to August 2003: Federal Rate Cut 0.25% Home Loan Rate Rose 0.78%

If you are waiting for long-term mortgage rates to fall further from here, don’t count on it. Your best chance to lock in the lowest mortgage rates since 2005 is now. Getting your application in process will allow you to capture a rate near all time lows.

Source: Regina Elmers, Coldwell Banker Home Loans