Fed rate cut could lower mortgage rates further

"The Federal Reserve delivered a 25-basis-point cut to its benchmark interest rate on Wednesday, setting the target range at 3.75% to 4%. The move, which brings the federal funds rate to its lowest level in three years, comes amid a softening labor market and inflation pressures. Monetary policy watchers expect another cut in December, which combined with a shift in the Fed's balance-sheet strategy could bring additional relief to mortgage rates, which are now at their lowest levels of the year."

"The 25-bps cut was confirmed by a 10-2 vote. The dissenting votes came from Fed Governor Stephen Miran, who sought a 50-bps cut, and Kansas City Fed President Jeffrey Schmid, who voted for no change in the policy rate. The Federal Open Market Committee (FOMC) also confirmed that it would end its quantitative tightening (QT) program, a rumored development in recent weeks."

The Federal Reserve cut its benchmark interest rate by 25 basis points to a target range of 3.75% to 4%, the lowest level in three years, citing a softening labor market and inflation pressures. Market participants expect another cut in December. The reduction and a shift in balance-sheet policy could push mortgage rates lower and improve housing affordability and demand. The 25-basis-point decision passed 10-2, with Fed Governor Stephen Miran favoring a 50-basis-point cut and Kansas City Fed President Jeffrey Schmid voting for no change. The FOMC said it will end quantitative tightening by rolling over certain Treasury principal payments and reinvesting excess agency debt and MBS principal starting in December, reallocating funds into Treasuries to better match maturities. Fed Chair Jerome Powell said the decision is consistent with ample reserve conditions.

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