The Federal Reserve has cut interest rates once more, for the third time since late August. That's going to reduce the rates on certain types of borrowing, including home equity lines of credit.
"New borrowers will have cheaper access to credit, and those who already have a home equity line will see lower monthly payments," says Jon Giles, head of home equity lending at TD Bank.
But what about mortgage rates? They're already near their lowest levels in years and are way down from where they were a year ago.
Thanks to the steep drop in rates, homeowners have been refinancing their mortgages at a fast clip.
Will the Fed's new move help mortgage rates go even lower?
The Fed and mortgage rates
Maybe not, says Alan Rosenbaum, founder and CEO of the New York-based mortgage lender GuardHill Financial Corp.
"Mortgage rates are more affected by daily movements in the stock and bond markets" than by interest rate changes from the nation's central bank, Rosenbaum says. But he adds that homeowners should remain on alert for refi opportunities.
"On a $500,000 mortgage, a reduction of 0.5% can save a consumer $2,500 per year and $75,000 over 30 years," says Rosenbaum.
Mortgage refinance applications slipped 1% last week, compared to the previous week, the Mortgage Bankers Association (MBA) reported Wednesday. But refinance activity was up a strong 134% versus the same week in 2018.
Mortgage applications of all types rose a scant 0.6% last week. The number of purchase applications — that is, for mortgages to buy homes — climbed 2% last week and were up 10% compared to the same time a year ago.
Use this calculator to see how a refinance could cut your monthly mortgage payment.
How mortgage rates have been moving
Even if there's not much impact from the Fed's rate cut, homebuyers will keep finding today's mortgage rates enticing, predicts Joel Kan, associate vice president of forecasting for the Mortgage Bankers Association.
"Considering how much lower rates are compared to the end of 2018, purchase applications should continue showing solid year-over-year gains," Kan says.
Rates on 30-year fixed-rate mortgages jumped last week to an average 3.75%, from 3.69% the previous week, according to mortgage giant Freddie Mac.
The rates on 15-year fixed-rate mortgages, which are a popular refinancing option, climbed to an average 3.18%, from 3.15% a week earlier.
Rates also are rising on 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — every year. ARMs are currently being offered at an average initial rate of 3.4%.
ARMs should adjust downward soon, thanks to the Fed. The changes are pegged to changes in the prime rate, which moves in sync with the interest rate the Fed controls.
The outlook for mortgage rates
Freddie Mac will release fresh mortgage rates data on Thursday. The rates tend to follow the yield on 10-year Treasury securities, which has been mostly higher this week.
The benchmark 30-year mortgage rate is likely to stay low — below 4% — through the end of 2019, according to Freddie Mac's current forecast.
Though mortgage rates have been going up in recent weeks, they're still down dramatically compared to this time last year.
You can get a 30-year mortgage at a rate more than a full percentage point below the rates offered in October 2018, and Freddie Mac has said refinancers are saving an average of about $1,700 a year in interest costs.
Check out today's best mortgage rates where you live.