Federal Reserve Chair Jerome Powell shook the financial world yesterday, hinting before Congress that a federal funds rate cut might soon be on the horizon. But what would that mean for the average American’s pocketbook?
The Federal Reserve may cut interest rates in the near future. What would it mean for your pocketbook and your mortgage?Update: The Federal Open Market Committee officially voted to reduce the federal funds rate by 0.25 percent on July 31.
Consumers with floating-rate loans, like adjustable-rate mortgages and home equity lines of credit, for example, could also benefit from the move, enjoying lower rates and decreased monthly payments as a result. For consumers with longer-term loans—including 30-year mortgages—a Fed rate cut wouldn’t have much of a direct effect. But according to Kushi, it should at least give consumers more confidence in borrowing cash if they need it.
Though Powell’s comments were only a hint at future moves, interest rates have already started to respond.
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