the Federal Reserve is making your mortgage rates drop and you are going to want to know how let's get into it I'm Dan with home buyer.com we are the mortgage company for firsttime home buyers and we are an actual mortgage lender that works with actual home buyers which means we actually know what we're talking about here mortgages are all that we do so right now find that YouTube button it's says subscribe press it you will join more than 10,000 other firsttime home buyers who get to know first when mortgage rates drop when new firsttime home buyer programs come out when discounts and Deals become available and when you are ready to get your mortgage preapproved or to see today's actual mortgage rates you can do that online at our website any time of day or night at home buyer.com okay let's move into the Federal Reserve and what happened at its December 2023 meeting its last of its eight scheduled meetings for the year and what that meeting did for your mortgage rate whether you're under contract to buy right now to buy a home or if you're buying sometime in the next 6 to9 months or hope to in 2024 so first let's do a quick refresher on the Federal Reserve and what it does the Federal Reserve is an independent group within the US government that controls the supply of money through banks through businesses and consumers and because the FED is apolitical it's independent it does what it does without inside outside influence the fed's main job above all else it's keeping prices stable we call that managing inflation that role was set forth by Charter 110 years ago in the Federal Reserve Act of 1913 which established the Federal Reserve System as the United United States Central Bank and keeping prices stable is a challenge because hundreds of forces affect prices the businesses pay for inputs that you and I pay for everyday items like clothing housing eggs and the fed's main tool for managing prices for managing inflation is an interest rate called the FED funds rate the FED funds rate is an interest rate for loans that Banks make with each other for overnight loans now why they do this it's beyond the scope of the video but that interest rate the FED funds rate it's the starting point for other rates that are in scope like charge card rates home equity line of credit rates personal loan rates and so on when the FED changes the FED funds rate those other rates change too this is why business loans and credit card rates why they're up 5 and a quar points as compared to two years ago the FED funds rate is up 5 and a quarter points as compared to two years ago and when everyone consumers and businesses pay more to borrow it takes money away that would have been spent on goods and services in the economy raising the FED funds rate slows the economy down it Taps the breaks on inflation and the FED tapped that break 11 times since last winter but after its December meeting and this was the third straight time that it did this the FED did nothing it chose to let the economy Coast for another 6 weeks because in inflation is reducing back to manageable levels still higher than what the FED wants but the rate of change is slowing like a car when you take your foot off the gas and for buyers of homes this is excellent because inflation and mortgage rates are linked and home affordability just got good a big takeaway here the Federal Reserve doesn't set mortgage rates it doesn't control them but the FED has influence on mortgage rates in a roundabout kind of way because mortgage rates also respond to inflation and here's why when you pay your mortgage each month you pay in dollars and your lender or whomever is collecting your payments they collect those dollars when inflation is increasing your money is worth less right that's the literal definition of inflation it's your money having less value so when there's inflation in the economy mortgage lenders don't want your mortgage at today's rate they don't want it because they know that your payments will be worth too little a year from now two years 10 years they're going to have your mortgage a long time so to account for that they make mortgage rates go up they have to because otherwise it wouldn't want your loan so rates have to rise when there's inflation now the other side when inflation rates are slowing or expected to slow mortgage rates can come down and if you've been trying to buy a home this year you've experienced the Federal Reserves effect on mortgage rates all through the year okay we can start in January rates had kind of leveled off through January and February in Spring and suddenly they jumped to the worst of they've been 23 years this summer in early fall and now we're looking at a massive 7we Retreat to end the year and we're exactly back where we started on January 1 it's the Federal Reserve t us with what it sees with inflation and how it's wielding its fed funds rate what inflation is going to do and Wall Street is moving in response to those moves so if your lease is coming up and you want to stop renting and start owning get pre-approved so you can find out at today's rates how much home you can buy with inflation rates down pre-approved buyers do better to pre-approve yourself any day any night anytime you want at home buyer.com hey while you're here don't forget to click the Subscribe button to get more mortgage and real estate news right here in your feed hit that Bell for notifications which we appreciate it helps us to reach more great people like you also watch these other suggested videos and you will be making better home buying decisions for you and your future I'm Dan with home buyer.com the mortgage company for first-time home buyers happy home buying
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