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Federal Reserve Cuts Interest Rates

The Federal Reserve recently lowered interest rates by a quarter of a percent, the third time this year, placing the target range for federal funds rates to 1.5-1.75 percent. In doing so, the Fed cited “global developments for the economic outlook as well as muted inflation pressures” as their reasoning.

While cuts in interest rates will not affect all homeowners or prospective homebuyers, those reductions are important indicators of the national economy. Federal Reserve Chairman Jerome Powell said, “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook.” In other words, as long as the economy remains strong and inflation stays under the 2 percent benchmark, federal interest rates could very well remain where they are, if not drop further.

Nationwide, consumers are largely in support of the rate cuts, according to a Fed Rate Survey from WalletHub. That report indicates that 71 percent of Americans support the cuts, while another 57 percent believed the economy will benefit from the cuts. These cuts will not significantly impact loan originations, however the report indicates that 40 percent of those surveyed are more confident in the economy when the Fed lowers interest rates. That could lead to increased mortgage applications and a more competitive market heading into the holiday season.

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