How Federal Reserve Rate Cuts ACTUALLY Impact VA Loans

So the Federal Reserve announced yesterday that they were going to be cutting rates by 25 basis points. But last time we saw the Federal Reserve do a big cut. We actually saw mortgage rates go up immediately after for almost six consecutive weeks. So what does all of this mean with regards to the future of mortgage rates in this video? I'm going to break down all of that for you guys and what I think will also happen to VA mortgage rates. So that way you guys can make a little bit more of an informed decision. Let's dive into the data and see exactly what's gone on in the market ever since this this announcement that Fed chair Powell made yesterday, what you're going to see on the screen is going to be mortgage-backed security coupons that will show some data that is a little bit favorable in regards to what's happened in the bond market. Now, the thing I want you to understand here though, is these these coupons that you're seeing where my mouse is, this is not the actual rate that you would actually receive. This is just strictly the coupon for mortgage-backed securities as a whole. Now, what you will see though, is the actual rate be affected by what these numbers can do in regards to how they actually perform. So what you're going to notice is specifically in these green boxes, the main coupons for mortgage-backed securities is the 6% coupon improved by 35 basis points in the positive direction. Whereas the five and a half percent coupon moved in in a positive direction of 55 basis points. Now, what does that mean when we actually look at rates themselves? These are the actual average 30-year VA rates over the last four months showing up on screen. So, I'm literally going back all the way to July 8th of 2024 and we are on today, November 8th of 2024. Before I go over where we're at today, I want to backtrack just so that we were on the same page with everything. You see right right around here, July 31st, Fed Chair Powell made an announcement that they were going to be cutting Fed funds rate by about 25 to 50 basis points at their next meeting, which was September 18th. What you're going to see from this point is the average VA 30-year fixed rate of 6.3% trended downwards almost pretty much every day up until that point. All the way through the month of August, all the way pretty much through most of September, it went down to 5.72. And on that day on September 18th, they came out and made their decision of whether or not it was going to be 25 or 50 and they chose to cut the Fed funds rate by 50 basis points. But after that, what you're going to see is interest rates trended upwards literally almost every single day all the way until the month of November. Now, why did that happen? Some speculation are going to say that's the election. Some people think that it's in regards to the Federal Reserve's recent announcement that they made just yesterday on November 7th. I think there is a very little truth to the election aspect of it. I think it's a little bit more tied to the Fed funds announcement yesterday because what happened between September 18th and yesterday was a lot of volatility. We had two hurricanes that took place. We had some updated data that was made more official regarding inflation and regarding unemployment and jobless claims that had come out and been updated since this announcement and that that updated data actually wasn't very favorable. It actually maybe kind of looked at that announcement that they made on September 18th as a little bit more of an overreaction. So that's I think part why I felt like we saw mortgage rates trend upwards from that point. Now yesterday's announcement on November the 7th at what I'm showing November 6 that 6.64 said that we were going to see a 25 basis point. So only a quarter of a point cut coming into this next one and then they also said though that they were expecting an additional or potential 25 basis point cut at their following meeting, which is expected to be I think it was I think it was December 11th December 17th. Their next meeting is December 17th. That is going to be taking place. So we could potentially see an additional cut take place of 25 basis points in December. Now, what does this all mean for mortgage rates? Well, I think that from what took place yesterday, we could possibly see rates drop by almost 30 to 40 basis points. Some data points that I have in terms of just other industry professionals that I know are saying that we'll probably see VA at this again guys. This is all average data. I'm just giving you very general average data on what's going on in the market. We could possibly see VA 30-year fixed average interest rates at about six and a quarter potentially even a little bit below that over the course of the next 30 days. So that's if you think about that, that's kind of in a way making up for that 50 cut from what we should have seen in the September timeframe because if you guys will remember leading up to this point, the market had reacted a little bit more proactively, which is typically what does happen with mortgage rates. It's very proactive to what's going to happen before an actual cut and I think because they were so proactive before that cut and then we had a lot of negative things happen from that time after we kind of they kind of I felt like maybe kind of toned it back a little bit and was a little bit more conservative with that decision-making and we're waiting for more positive data to come out before they made their decision to bring rates down again. This is my personal opinion guys. I just wanted to come on here and give you guys a little bit of an update on what I think the market is doing some other things to keep in mind is if you didn't watch on Wednesday nights live stream that I did with Nathan Nathan is a guest that we had on the live stream and I had him on because he is an industry professional who really really dives deep into the nitty-gritty of what's going on in the market and he shared a lot of really great insights on where he thinks mortgage rates are going to be in the next 30 days where he thinks a mortgage rates could be in the next six months and also where he thinks mortgage rates can be in the next 12 and 24 months for those of you that are homeowners considering refinancing and also for those of you that are homebuyers looking to get into home ownership. He really gave some really good nuggets on there. So if you haven't checked that out go check that out. I'm going to link it in the end card of this video because it is a he shared some really valuable nuggets that I think more people need to hear the last thing I want to leave you guys with which is the most important thing Jesus loves you and he paid the ultimate price for your life. So if you turn to him trust in him and believe in him, he has a beautiful plan of purpose for you. I'll see you guys in the next one.