Eagle County mortgage brokers say rates haven’t dropped just because the Fed lowered its rate

Phones were ringing Thursday at local mortgage companies in the wake of the Federal Reserve’s Wednesday decision to drop its baseline interest rate. But callers were in for a letdown.

Those callers “have been asking me if rates are a half-percent less today,” said Kevin Sprincz of Rate Mortgage in Edwards. The short answer is no, he said.

The reason is that the mortgage market had already priced in the anticipated cut in rates, which have already declined by about .5% over the past several weeks.

“Lenders were already bracing (for the cut),” David Lau of Central Rockies Mortgage in Avon said.

Longtime local mortgage broker Chris Neuswanger of Eagle One Financial said mortgage rates are determined not by the Federal Reserve but by the bond market. That means rates tend to precede the Fed’s actions. In the past month or so, bond rates have declined by a half-percent or so, and that drop has been mirrored by mortgage rates.

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There are a lot of different products on the market, but Neuswanger said a 30-year fixed-rate conforming mortgage loan, one with 20% down, can be had at a rate of about 5.375%. A 15-year fixed-rate loan with the same 20% down is currently in the mid-4% range, he added.

Further mortgage rate declines will depend on further rate cuts by the Fed, and the next expect action isn’t expected until after the Nov. 5 election.

While Wednesday’s Fed decision hasn’t impacted the mortgage market, it did get phones ringing, and that’s been “good for business,” Lau said.

Between high prices, low inventory and higher rates than those seen in 2021 and 2022, it’s been a slow couple of years in the mortgage business, Lau added.

Neuswanger said he has one of the 3% mortgages that were common in the first years of this decade, and he has no plans to move.

“My mortgage payment is cheaper than I could possibly rent a two-bedroom apartment for,” he said.