The Fed's first rate cut since 2008 took place on Wednesday (07/31/2019) in response to an apparent slow down in the economy in area of job creation and manufacturing, below target inflation, and slowing global growth. But what does this 0.25% rate cut means to you and me? Here is a synopsis.
If you're in the market to buy or sell a house, fixed rate mortgage rates have already declined. Contrary to popular belief, there is no direct correlation between the federal funds rate and mortgage rates. Mortgage rates track the 10-year Treasure rate, which have declined just over 1 percentage point since November. The impact of the recent rate cut will be seen in variable rate mortgages and home-equity loans.
Credit card debt and personal loan interest rates are affected and should be less expensive, as they track the bank prime rate, which is 3 percentage points above the Feds funds target rate, and will likely move down. However, the credit card companies will, most likely, not reduce your rate automatically. Cardholders should contact the credit card company and ask for the lower rate.
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