Monday, November 11th 2024, 5:05 pm
On Money Monday our money expert Paul Hood joined News On 6 at 4 p.m. to discuss how the federal reserve's latest interest rate cut impacts mortgages, savings and more for Oklahomans.
The Federal Reserve voted to lower the basis rate by 25 points, slightly smaller than the 50 point cut in September.
Explaining the Fed's Rationale, Paul Hood said: "The Fed is really, to be crude, government intervention. They adjust up and down to control the economy, to try to spur it or slow it down."
One key area of interest was how the rate cut would affect mortgage rates. Mortgage rates had actually gone up the previous week, despite the Fed's move. Paul Hood provided some context:
"Mortgage rates are tied to bond rates, and bond rates are more free enterprise, supply and demand. What is the economy look like to them? What is the available currency out there, money out there, and so it they usually move in in the same direction, but not necessarily."
He went on to explain that mortgage rates tend to be a lagging indicator, and predicted it could take "another 60-90 days before we see some change" as the market adjusts.
It also has implications for refinancing and high-yield savings accounts. Paul Hood said to "keep an eye on trends" when it comes to refinancing, noting that while "drastic changes are unlikely, mortgage rates should eventually come down."
Regarding savings accounts, Paul Hood acknowledged that the rate cut would mean "you're not able to make as much" on high-yield accounts. He said this to the flow of money into the stock market, which reduces the funds available for banks to offer higher savings yields.
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