Mortgage Rates- Will they fall next week when the Fed cuts the Fed Fund Rate?

Last Friday the Empolyment numbers for August were released.  Traders were hoping that the Jobs Report would come in below expectations, as to clearly pave the way for a Fed rate cut on Sept. 18th.  The Jobs number was so lousy the only debate left is if the cut will be .25% or .50%.  The Labor Department reported a loss  of 4,000 Jobs in August vs expectations of a 100,000 - 110,000 gain.  The month's loss in Jobs was the worst report in 4 years.  This number helped mortgage rates to decease at the start on this week as traders left stocks to buy in the bond market.

Fed's rate cuts will help lower rates on Home Equity Lines of Credit, personal loans, auto loans and commercial paper, but as we all know, a rate cut by the Fed may actually cause fixed rate mortgage rates to rise.  This is why the Fed's statement, which accompanies the cut, will be so important.  If the Fed says they are comfortable with inflation being contained, bonds will improve.  But if the Fed indicates they are cutting rates in the face of inflationary fears, bond prices will likely move lower causing home loan rates to rise.

As always it is very important to work with a mortgage professional that can advise you of these conditions.  I would be pleased to discuss the state of the market with you at anytime.  Please contact me at Wallick & Volk Mortgage in Flagstaff, AZ for further information.