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If the **Federal Reserve cuts interest rates by 0.25% and simultaneously restarts a form of quantitative easing (QE) by buying about $40 billion per month of securities, the overall monetary policy stance becomes very accommodative. Here’s what that generally means for interest rates and the broader economy: 📉 1. Short-Term Interest Rates The Fed’s benchmark rate (federal funds rate) directly sets the cost of overnight borrowing between banks. A 0.25% cut lowers that rate, which usually leads to lower short-term borrowing costs throughout the economy — for example on credit cards, variable-rate loans, and some business financing. Yahoo Finance +1 In most markets, short-term yields fall first, because they track the federal funds rate most closely. Reuters 📉 2. Long-Term Interest Rates Purchasing bonds (QE) puts downward pressure on long-term yields. When the Fed buys large amounts of Treasury bills or bonds, it increases demand for them, pushing prices up and yields down. SIEPR This tends to lower mortgage rates, corporate borrowing costs, and yields on long-dated government bonds, though not always as quickly or as much as short-term rates. Bankrate 🤝 3. Combined Effect Rate cuts + QE = dual easing. Rate cuts reduce the cost of short-term credit, and QE often helps bring down long-term rates too. Together, they usually flatten the yield curve (short and long rates both lower). SIEPR Lower rates overall tend to stimulate spending by households and investment by businesses because borrowing is cheaper. Cleveland Federal Reserve 💡 4. Market and Economic Responses Financial markets often interpret such easing as a cue that the Fed wants to support the economy. Stocks may rise and bond yields may fall. Reuters However, if inflation is already above target (as it has been), this accommodative stance could keep long-term inflation elevated or slow the pace of inflation decline. That’s one reason why Fed policymakers are sometimes divided over aggressive easing. Reuters 🔁 5. What This Doesn’t Mean The Fed buying $40 billion in bills right now may technically be labeled something like “reserve management purchases,” and some market analysts argue this may not be classic QE. But whether it’s traditional QE or not, the effect on liquidity and longer-term rates is similar: more Fed demand for government paper equals lower yields. Reuters In simple terms: ✅ Short-term rates will be lower because of the rate cut. ✅ Long-term rates are likely to decline too if the asset purchases are sustained. ➡️ Overall borrowing costs fall across the economy, boosting credit, investment, and spending. ⚠️ But this also risks higher inflation if demand strengthens too much while supply remains constrained. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

How will AI reshape the mortgage industry

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That is wild — and honestly a sign of where mortgage tech is heading fast. A three-hour closing versus three days used to be unheard of. What likely made it possible: 🚀 Why it happened so fast 1. Automated income/asset verification Lenders now pull bank statements, payroll data, and tax transcripts digitally instead of waiting for uploads. 2. Instant credit + DU/LPA underwriting If everything lines up, AUS can issue an immediate approve/eligible. 3. e-sign + remote online notarization (RON) Cutting out scheduling delays saves days. 4. Title automation Many second mortgages use “property data reports” or streamline title searches that don’t need a full title commitment. 🧩 Why second mortgages close faster than first mortgages They don’t require an appraisal if AVM hits. Fewer compliance disclosures. Title and insurance requirements are lighter. No escrow setup. 📈 Bigger picture The mortgage industry is absolutely racing toward: close-in-a-day loans fully digital underwriting AI-assisted document interpretation more instant approvals for clean files We’re going to see more of what you just experienced—especially for HELOCs and seconds. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329 

✅ Why mortgage rates can rise even when the Fed cuts rates Mortgage rates don’t move directly with the Fed Funds Rate. Instead, they are primarily driven by the 10-year Treasury yield and investor expectations about inflation, recession risk, and future Fed policy. Here are the main reasons this disconnect happens: 1. Markets expected the rate cut already If investors already priced in the Fed’s cut weeks or months beforehand, then the cut itself is old news. When the announcement hits, mortgage rates may not fall—and often rise if the Fed hints at fewer future cuts. 2. Fed cuts can signal economic trouble Sometimes the Fed cuts because the economy is weakening. That can cause: Investors to worry about higher future inflation, or A “risk-off” move where money leaves bonds Both of these drive the 10-year yield UP, which pushes mortgage rates UP even though the Fed cut. 3. Bond investors wanted a bigger cut If markets expect a 0.50% cut but the Fed only delivers 0.25%, that’s seen as “too tight.” Result: 10-year yield jumps Mortgage rates move higher 4. Fed messaging (“forward guidance”) matters more than the cut Example: The Fed cuts today, but says: “We may need to slow or pause future cuts.” That single sentence can raise mortgage rates, even though short-term rates just went lower. 5. Inflation surprises after the cut If new inflation data comes in hot after a Fed cut, the bond market panics → yields go up → mortgage rates go up. Quick summary Fed Cuts Rates Mortgage Rates Move ✔ Expected or priced in Can rise or stay flat ✔ Fed hints at fewer future cuts Often rise ✔ Inflation remains sticky Rise ✔ Economy looks unstable Rise ❗ Only when 10-year yield falls Mortgage rates fall tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

 New conforming loan limits increase to $832,750, which is great considering we have had price decreases on homes this year. So if you put down 3% the purchase price would be $858,051, and 5% down would be $876,578. Why would that matter? Well, you go above, and you are in Jumbo territory, where you have to put 20% down vs the 3% or 5% down. So, really great news that there is an increase, and when rates do come down, there will be all the homeowners who have the low interest rates, probably make a move to either downsize or upsize on their home, which will create activity and an increase in home prices. So overall, exciting to see the loan amounts increase to help offset the higher home prices tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

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