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The Fed cut the discount rate (prime rate) by .25% today so the prime rate is 5.0%. Â In the discussion surrounding the cut announcement, the fed hinted that no further cuts would be forthcoming in the near future.Â
As noted by John Shapiro of Private Mortgage Advisors, “The markets have not reacted strongly immediately after the announcement as the bond market had already priced in this cut.  As a reminder, when the prime rate goes down it doesn’t necessarily follow that interest rates on non equity line mortgages will go down. In fact, it is most often the case the immediately after a rate cut, longer term mortgage rates (5/1 ARM, 7/1 ARM, 10/1 ARM, 30 year fixed) generally go up. We will see what happens over the coming days, but for now, know that the prime rate went down and longer term rates have stayed stable so far today.”