Q: I’m looking for mortgage rates online and want to build modular next year, now just looking for the best deal and wondering when today’s Fed actions will be reflected in the offers I find.
A: Cuts in daily interest rates from the central bank to the commercial banks do not directly translate to mortgage rates if we are thinking of fixed rate long term mortgages.
What drives mortgage rates is the long term rates for bonds and GICs. As banks have to pay less for funds from those sources they can cut long term mortgage rates.
We can find examples of long term rates moving in exactly opposite directions compared to daily interest rates.
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