Kris Cedillo from Northpoint Mortgage joins Joe Aguiar and Abby Breau on the Closing Time Podcast to talk mortgages. What does the Fed lowering the rate mean to you? Plus, a look at FHA and government back loans. Feds lowing the rate last week and what that means exactly.
Jerome Powell spoke and here some notes
- The economy is still growing and they expect an expansion
- Looking to see positive results from this at the beginning of 2020.
- People who live and work in lower-income communities are now getting the opportunity to participate in the market and experience more job opportunities and more wealth growth
- Feds want inflation at 2% and it's around 1.8% now. Lower inflation means people invest less in real estate, less building, nobody buys bonds and just save money. We don't want to do that because then we have deflation which is not good for people with a lot of debt like most Americans. The last thing we want to see is deflation fall to the point that develops a liquidity trap where money does not circulate and every just saves money and we end up with a crash.
“The reason why we raise interest rates, generally, is because we see inflation as moving up, or in danger of moving up significantly, and we really don’t see that now,” Mr. Powell said
"The bubble is going to burst!" I keep hearing from buyers that they feel home prices are going to continue to go down.
Why is now the perfect time to buy?
Why is now the best time to refinance?
What is the refinance process?
Kris's email:
You may have heard that the Federal Reserve is highly likely to cut rates this week. That is true. It's happening tomorrow. It would be a big surprise for financial markets if the Fed did NOT cut rates at this point. You may be wondering if this means anything for mortgage rates or worse, you may actually be convinced that a Fed rate cut means lower mortgage rates.
The only mortgage rates that have anything to do with the Fed Funds Rate (the thing the Fed cuts or hikes) are those associated with some home equity lines of credit (HELOCs). But when it comes to 1st mortgages, and most 2nd mortgages, any impact from the Fed's rate cut has long since been felt. That's because the bond market that dictates mortgage rates can move in real-time whereas the Fed only meets once every 6 weeks. (You can read more about it here,
Remember, Fed rate cuts impact SHORT term loans like Home Equity, Car loans, personal loans, etc….
We will continue to monitor your customers floating, or locked in rates to see if any beneficial change can take place moving forward due to the Bond market.
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