Why Don’t Mortgage Rates Drop When There Is A Cut In The Federal Funds Rate? Whenever the Fed cuts the federal funds rate, customers call mortgage lenders, eagerly expecting to take advantage of a drop in mortgage rates. By the time these phone calls are over, customers frequently feel disappointed and even suspicious. It just doesn’t seem right. Why would banks raise mortgage rates while the Federal Reserve is cutting rates? Believe it or not, there is zero causation between mortgage rates and the Federal Reserve reducing its target for the federal funds rate.

A look at mortgage rates must begin with a history lesson. From Jan. 3, 2001, to June 25, 2003, the Federal Reserve reduced its target for the federal funds rate 13 times. Here’s what happened to the average 30-year mortgage rate in the month after each cut: It fell eight times and rose five times.  It’s simply not true that a Fed rate cut automatically leads to a drop in fixed mortgage rates. Mortgage rates go up and down according to investors’ expectations of long-term inflation. Simply put: If investors think inflation will accelerate, mortgage rates (and other long-term interest rates) rise. The nation’s overall economy doesn’t appear to be in recession (although the housing sector, and some Midwestern states, might be). Yet the Federal Reserve added some stimulus by cutting the federal funds rate. That, in turn, could lead to faster-rising prices and, therefore, higher long-term interest rates. When you see mortgage rates declining, they’re reacting to market forces — and the Fed eventually plays catch-up.

In Fort Lauderdale, there are a few Outside KitchenVendor Resources that stand out.  They are:

Allied Kitchen & Bath 954-564-1611 Ft. Lauderdale
Broward Custom Kitchens 954-960-0550 Pompano Beach
The Kitchenworks, Inc. 954-764-1482 Ft. Lauderdale
Olde Native Trading Company 561-296-9620 West Palm Beach
Outdoor Living Concepts 561-615-1325 West Palm Beach
Shuster Design Associates, Inc. 954-462-6400 Wilton Manors

For resources on any home improvement project, contact Courtney Silverman, The Keyes Comnpany / Realtors