The Federal Reserve just cut its benchmark interest rate — but don’t expect lower mortgage rates as a result.
The Fed made the rare move to lower the federal funds rate by a half-point to a range of 1% to 1.25% in between its regularly scheduled meetings. The central bank noted that the move was in response to the “evolving risks” the COVID-19 coronavirus outbreak poses to the economy.
The novel coronavirus first emerged around Wuhan, China, late last year. As of Tuesday, there were 91,313 cases and 3,118 deaths worldwide. At least 105 people had contracted the virus in the U.S. as of Tuesday.
“The Fed is catching up,” said Holden Lewis, mortgage and real estate expert at NerdWallet. “Mortgages respond to market forces and not to the Fed. The Fed is actually following and not leading when it comes to mortgage rates.”