From Jan. 3, 2001, to June 25, 2003, the Federal Reserve reduced its target for the federal funds rate 13 times. However, the average 30-year mortgage rate fell eight times and rose five times. It’s not true that a [tag]Fed rate cut[/tag] automatically leads to a drop in fixed [tag]mortgage rates[/tag]. There is zero causation between mortgage rates and the Fed reducing its target for the federal funds rate. Mortgage rates go up and down according to investors’ expectations of long-term inflation. If investors think inflation will accelerate, mortgage rates (and other long-term interest rates) rise. The Mortgage Kit: Select the Right Loan, Lock in the Lowest Rate, Negotiate the Best Terms (Mortgage Kit)

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