What COVID-19 Federal Reserve Interest Rate Cuts Actually Mean to Mortgage Borrowers

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Yesterday at 5 p.m. ET, the Federal Reserve cut its benchmark Funds Rate to a range of 0%-0.25%, and pledged to buy $700 billion in Treasuries and mortgage bonds, to bolster the economy against a coronavirus slowdown.

This does not immediately cut fixed-rate mortgage rates, as they’re keyed to bond prices. But the Fed’s bond buying program may increase those prices, which would eventually lower mortgage rates.  What this actually means to mortgage borrowers is there is no immediate effect on loan interest rates as a result of the federal interest rate cut.

Photo Credit:  Forbes



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