The Federal Reserve announced a 25-basis-point cut to the federal funds rate at the conclusion of its meeting on Wednesday, Oct. 29. The bankers had shifted into rate-cutting mode back in September with a crop of the same size. A basis point is one one-hundredth of a percentage point, so today’s trim amounts to a quarter of a percentage point.
The Fed doesn't set mortgage rates, but adjusting that key short-term borrowing rate ripples outward to other interest rates. Lately, mortgage lenders have priced in the Fed’s cuts before they happen rather than waiting for the central bankers to make a move. This was certainly the case in this cycle; mortgage rates slid lower each week in October and appear headed for 6%. It's been over three years since average 30-year mortgage rates were that low.
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