"The fed funds rate falls. That's the interest rate charged to banks for overnight loans from other banks. The prime rate falls. That is the interest rate financial institutions charge to their most-favored customers. Savings account rates fall, as do interest paid on certificates of deposit (CDs), and on checking, brokerage, and cash management accounts. Loan rates fall. That can include personal loans, home equity loans, and home equity lines of credit (HELOCs)."
"Mortgage rates are longer-term debt, as anyone with a 30-year home loan knows. That's a very long debt runway. The fixed rate you pay is evergreen, with a margin built in to last through many interest rate cycles. The bond market generally reacts to longer-term events, such as inflation, employment, and macroeconomic trends. Sometimes, mortgage rates fall after a Fed rate cut. Sometimes, they don't."
A Fed rate cut reduces the fed funds rate, which lowers the prime rate and short-term borrowing costs. Deposit yields on savings accounts, CDs, checking, brokerage, and cash management accounts typically decline. Consumer loan rates, including personal loans, home equity loans, and HELOCs, generally fall, with credit card rates moving lower later. Mortgage rates are tied to long-term bond yields and respond to inflation, employment, and macroeconomic trends rather than directly to Fed moves. Mortgage rates may fall, hold, or rise after Fed cuts; continued declines usually require softer labor or inflation data to lower long-term yields.
Read at Boston Condos For Sale Ford Realty
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