"You might have thought mortgage rates would already be lower, since the Federal Reserve met last week and cut the federal funds rate 25 basis points. Here's the thing, though - the Fed doesn't control mortgage rates. If you weren't sure how that works, you're in good company: Just 25% of Americans know that the Federal Reserve doesn't set mortgage interest rates, according to a recent NerdWallet survey conducted online by The Harris Poll."
"The Federal Reserve is one ingredient in the mix that determines mortgage rates. While its significance is more like a cup than a teaspoon, it's not the whole recipe. The central bankers set an influential short-term borrowing rate that often ripples out to affect other interest rates. Fed decisions are also a bellwether for the nation's economy, providing strong signals on how we're doing and where we're headed."
Mortgage interest rates stayed flat at an average 6.14% APR for a 30-year fixed mortgage in the week ending Dec. 18, according to Zillow rates provided to NerdWallet. The Federal Reserve cut the federal funds rate by 25 basis points, but that short-term rate does not directly set mortgage rates. The Fed influences markets and signals about the economy, which in turn affect bond yields and mortgage pricing; mortgage rates often move similarly to 10-year Treasury yields. Mortgage rates often move ahead of Fed meetings, fell before September's cut, and have fluctuated within a narrow range while the October government shutdown disrupted economic data flows.
Read at SFGATE
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