Fed Cut Rates

Fed Cut Rates

| September 19, 2019

Federal Reserve Cuts Rates 1/4 percent

Yesterday the FOMC has cut interest rates by 25 basis points, or one quarter of one percent. What does that mean for real people?

Money Market Rates

First, we expect bank savings rates to be reduced by a similar amount. Back in the summer we saw money market and some savings rates in the 2.3% range. But now that we've had two cuts by the Fed totaling 50 basis points or a half percent, most money market rates have been reduced as well. 

Mortgage Rates

Mortgages work a little bit different. The Fed cannot directly control mortgage rates like they can short-term savings rates. But the bond market and mortgage market have been expecting the Fed to cut rates, and so the mortgage rates largely had this cut "baked in." Therefore, at Peak Wealth Management, we don't expect mortgage rates to adjust down as a result of a Fed rate cut. The good news is that mortgage rates remain nearly all-time lows, so if you're looking for that new house in DPT (Downtown Plymouth, MI), you may still get a fashionable rate. 

Prime Rate

The prime rate at banks probably will be adjusted lower. This can lower your money market rate, but be helpful for your floating HELOC rate (home equity line of credit) or a new car loan. Peak expects these rates may be adjusted lower as a result of the cut this week. 

Work with a CFP® and Retire with Confidence at Peak Wealth Management in Plymouth, MI.