About Jon Iacono
Jon Iacono brings his 21+ years of experience in the industry to Advisors Mortgage Group. Jon was born in Brooklyn, NY but has lived the majority of his life in Monmouth County, NJ. As a graduate of Monmouth University with a concentration in Management and Computer Science, Jon brings his training and education to Advisors Mortgage to help grow and manage the recruiting team.
Jon worked alongside many mortgage and real estate industry professionals previously with Mortgage Intelligence companies such as, Mortgage Market Guide, Loan Tool Box, Certified, Scripts for Success, CMPS, MBS Highway, Turning Point CRM and more. Jon gives back to his community and has been an active volunteer firefighter for the Colts Neck 84 -1 station since 2004. He enjoys staying active by playing golf, lifting weights, boxing, training Jiu Jitsu and most importantly spending time with his two kids Lily and Jonny Jr.
The Fed Cut Rates, Now What?
September 23, 2024
Last week the Federal Reserve released their new policy statement, and they mentioned that they cut the Federal Funds Rate by 50 basis points or 0.5%.
What does this mean for mortgage rates?
The Federal Reserve’s Federal Funds Rate is the lending rate that banks use when they lend to one another overnight. So essentially, it will have a closer affect to more things like, car loans, credit cards, home equity lines of credit and more of a trickle-down effect to longer term items like mortgages. Mortgages are tied to mortgage-backed securities or bonds. And when looking at bonds the main catalyst for trading is inflation. As inflation eases, bonds increase in price and longer-term interest rates, such as on mortgages improve.
The Federal Reserve has had the Fed funds rate at a range between 5.25 and 5.5% for right around two years or so, and they haven’t made a cut to that in a long time. This move to lower their rate certainly signals a pivot in the Federal Reserve cycle.
By the Fed cutting the rate, this signals that their inflation goals are getting closer to being met. Their goal is a 2% reading on the Personal Consumption Expenditures core inflation index. And it’s currently in the mid twos right now. So, they’re getting close to their goal on inflation. And since inflation is certainly cooling, interest rates will continue to get lower over the next year.
In conclusion, since the federal funds rate has a trickledown effect but not a direct correlation with mortgage rates, it may take just a bit of time for things to develop in the mortgage world.
