Earlier this week, President Trump called for the Federal Reserve to cut interest rates as a way to stimulate the economy. However, after deliberation the Fed committee decided not to alter rates one way or the other. This decision was based on various other economic indicators that they studied.

Studying the Economic Indicators

Continued job gains and economic growth were two of the key factors they looked at as the country’s most recent economic expansion nears its 10-year mark. Even more importantly, it was also noted that current weak inflation rates would likely increase in the near future. Therefore, raising or lowering the interest rates was not advised at this time.

After interest rates steadily rose in 2018, we’ve seen things level out and even come back down in 2019 to a point where the real estate and mortgage markets are really benefitting. Home prices also continue to rise, but at a decelerating rate than in recent years thanks to more development and growing inventory. The conditions have been good for home buyers and homeowners looking to refinance their current mortgage loans. Interest rates remain in a comfortable place.

“The labor market remains strong … economic activity rose at a solid rate,” said the Fed in a policy statement released Wednesday. “Nothing of what the (Federal Open Market Committee) did today … should be read as a signal that a future change in policy is coming.”

The Impact of Inflation

Easily the biggest factor affecting interest rates right now is the rate of inflation. The Fed noted in its policy statement that a “muted” level of inflation is a chief concern as it continues to stay below of the standard 2% target. The most recent data has it around 1.6 percent, which presents doubts about the strength of the economy and possibly makes investors less willing to invest.

Dropping the Federal funds rate (which ultimately determines the rates for all types of consumer credit and loans, including mortgages) didn’t seem like the prudent thing for the Fed to do. Likewise, there was no argument to raise rates either. As of now, they are taking a “stay the course” approach when it comes to the Fed rate.

Mortgage Market Implications

As a leading mortgage loan company, we are always staying on top of the latest economic trends and Fed decisions. If they do decide to drop the rates, then home buyers or refinancers will need to be ready to act. Even if they keep the rates the same, you want to make your move in case they decide to raise the rates.

Getting the best mortgage is so much about timing and planning. Transparent Mortgage is here to help you with all your home loan decisions and we’ll work with you to get the best possible results. If you are thinking of buying a home or refinancing your mortgage loan any time in the near future, now is the time to talk with our team and be ready for your next steps.

Call Transparent Mortgage today at (619) 701-3906 to get started on your mortgage loan application and pre-approval.

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.