Federal Reserve Slashes Interest Rates to 0% Obama Era Student Loans Credit Cards Win

Federal Reserve Slashes Interest Rates to 0% Obama Era Student Loans Credit Cards Win

The Federal Reserve cut its benchmark interest rate to 0% on Sunday — but don’t necessarily expect lower mortgage rates as a result.

The Fed announced it would cut interest rates a full percentage point Sunday night, in addition to a $700 billion quantitative easing program.

The central bank had already made the rare move to lower the federal funds rate by a half-point two weeks ago to a range of 1% to 1.25% in between its regularly scheduled meetings.

When the Fed cut interest rates two weeks ago, mortgage experts noted that the central bank was “catching up” to where markets had headed. “Mortgages respond to market forces and not to the Fed,” Holden Lewis, mortgage and real estate expert at NerdWallet, told MarketWatch earlier this month. “The Fed is actually following and not leading when it comes to mortgage rates.”

Mortgage rates have plummeted since the beginning of the year to the lowest average in 50 years. While the Federal Reserve adjusts short-term interest rates, mortgage rates fluctuate based on long-term bond rates.

In particular, mortgage rates in the U.S. roughly track the direction of the yield on the 10-year Treasury note TMUBMUSD10Y, 0.745%. The 10-year Treasury had fallen to all-time lows in recent weeks as investors fled to the safety of bond markets amid the downturn in equity markets.

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