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Buying Florida
Fed dropping rates next week , what does that exactly mean
🏦 1. Fed Rate vs. Market Rates
When the Federal Reserve cuts rates, it lowers the federal funds rate — the rate banks charge each other for overnight loans.
That directly affects:
Credit cards
Auto loans
Home equity lines of credit (HELOCs)
These tend to move quickly with Fed changes.
🏠 2. Mortgage Rates
Mortgage rates are not directly set by the Fed — they’re more closely tied to the 10-year Treasury yield, which moves based on investor expectations for:
Future inflation
Economic growth
Fed policy in the future
So, when the Fed signals a rate cut or actually cuts, Treasury yields often fall in anticipation, which can lead to lower mortgage rates — if investors believe inflation is under control and the economy is cooling.
However:
If markets think the Fed cut too early or inflation might return, yields can actually rise, keeping mortgage rates higher.
So, mortgage rates don’t always fall right after a Fed cut.
📉 In short:
Fed cuts → short-term rates (credit cards, HELOCs) usually fall fast.
Mortgage rates → might fall if inflation expectations drop and bond yields decline — but not guaranteed.
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