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No, The Fed Didn't Cut Mortgage Rates!

Mortgage rates were mostly unchanged today, which will come as a surprise to scores of consumers who mistakenly believe the Fed’s 0.25% rate cut equates to a 0.25% drop in rates.  The Fed does not set mortgage rates! 
Actually, to be fair, the Fed Funds Rate (that thing everyone is talking about today) is in fact the basis for Home Equity Lines of Credit (HELOCs) in many cases, but that’s it as far as the mortgage world is concerned.  The most common mortgages are determined by other parts of the financial market. 
In fact, mortgages actually “turn into” securities that are traded in financial markets as a part of the process that makes them safer and easier for investors to buy. Those securities trade just like other securities, for the most part (e.g. stocks, bonds, etc.), and it’s the price movement of those securities that most directly dictates mortgage rates.  Shockingly enough, these are known as Mortgage-Backed Securities (MBS).

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Source: mortgagenewsdaily.comNew feed

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