Mortgage rates have recently reached their lowest level in 18 months, following a significant cut in short-term interest rates by the Federal Reserve. While this presents a potential opportunity for borrowers, experts advise caution. The current mortgage rates, influenced more by 10-year Treasury yields than the federal funds rate, have decreased from 7.79% to 6.20%. However, the decline may not be as rapid or drastic as some hope, given the economy's resilience and persistent inflation. Borrowers are encouraged to improve their creditworthiness before applying for loans, as a strong credit score can significantly impact mortgage terms. Refinancing is advisable only if it results in at least a 2% rate reduction, considering the associated closing costs. For those struggling financially, immediate action may be necessary to alleviate monthly payments. With the housing market showing signs of improvement, potential buyers should act now to avoid future bidding wars, while keeping an eye on forthcoming rate cuts.
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