Something that hasn’t happened since March 2020 is likely to occur this week – the Federal Reserve will issue a rate cut. With its federal funds rate frozen at a range between 5.25% and 5.50%, the highest in decades, the Fed is poised to issue its first reduction in years, likely by 25 basis points. But additional cuts could come later this year with the Fed set to meet two more times before the end of 2024.

The last time the Fed issued a cut was during the height of the pandemic and rates on borrowing products plummeted as a result. So does that mean that mortgage interest rates, already down by more than a point since 2023, will drop this week, too? Not necessarily. Below, we’ll break down what homebuyers should know now.

Start by seeing how low of a mortgage interest rate you could secure here.

Will mortgage interest rates drop this week?

The short answer to this question is “maybe.” The longer answer depends on a series of considerations that will vary based on the lender in question. That’s because this week’s presumed fed rate cut may have already been “priced in” by the bank or lender you’re planning on using. So the rate that’s listed on the lender website today, for example, may not be materially different than what’s offered after a formal cut is issued on September 18. How much each bank has priced in this week’s cut, however, will vary. 

But mortgage interest rates don’t just follow the Fed’s monetary policy, even though they’re greatly influenced by it. They also track alongside the rate on the 10-year Treasury yield. Mortgage interest rates tend to follow that direction, going up or down as the yield does. This relationship exists because mortgages and 10-year Treasuries are competing long-term investments in the bond market.

When the 10-year Treasury yield rises, it typically indicates higher investor confidence in the economy and potentially higher inflation expectations. This leads investors to demand higher returns on mortgage-backed securities, causing lenders to increase mortgage rates. When the 10-year Treasury yield falls, mortgage rates tend to decrease as well. This correlation means that even if the Fed keeps its policy rate steady, changes in the 10-year Treasury yield can cause mortgage rates to fluctuate. 

And remember that the best mortgage interest rates and terms will always be reserved for borrowers with clean credit histories and high credit scores. So even if rates do fall again later this week, you won’t be able to take advantage if your credit profile isn’t as attractive as lenders want it to be. The rates listed on lender websites, for example, are for those with excellent credit scores. And some will also list their offers with mortgage points already tacked on, making them appear lower than they would be if you didn’t pay that fee to score the lower rate. It’s critical, then, to monitor mortgage rates daily right now and to pay close attention to the fine print to make sure that what’s being advertised is available to a lender with your unique profile.

Start checking mortgage rates online today.

Don’t forget the cumulative effect

Even if mortgage interest rates fall directly in proportion to the federal funds rate — which is unlikely to happen — that reduction will only be by 25 basis points, if the predictions for this week’s rate cut hold true. That will just offer marginal relief to buyers. But don’t forget the cumulative effect of rate cuts. If the federal funds rate is reduced by that same amount when the Fed meets in November and again by the same amount when they meet in December, buyers could be positioned to see significant relief in their rate offers this year. And other possible cuts in 2025 could make it even more affordable to borrow money.

But mortgage rate cuts will inevitably complicate the homebuying process too, likely leading to higher home prices and steeper competition amid buyers that had previously been sitting on the sidelines. So prospective buyers will need to carefully weigh upcoming changes to the rate climate versus acting now to determine which is the most cost-effective approach for their situation.

The bottom line

Yes, mortgage interest rates may drop again this week but, more likely, most of today’s offers have preemptively reflected that cut. But with multiple rate cuts being discussed for the months ahead, the cumulative effect on mortgage interest rates is likely to be substantive. So it’s critical to consider what the homebuying market could look like then versus the benefits of acting now to better determine your best approach.

Learn more about today’s mortgage interest rates here.

With millions of peoples’ incomes stretched thin by high consumer goods prices, elevated housing costs and other economic hurdles, more and more Americans are relying on their credit cards to pay for everything from groceries to emergency expenses. As a result, a growing number of cardholders are struggling with rising credit card debt — and cardholders now owe a collective total of $1.14 trillion nationwide. 

But whether you’re using a credit card to cover unexpected bills, fill in gaps from budgetary restraints or are simply overspending, carrying a balance from one month to the next has never been more expensive. After all, the average credit card rate is hovering just below 23%, a record high. And those types of interest charges can make your card debt spiral out of control quickly if you aren’t careful.

One option to manage this debt is credit card debt consolidation, which involves using a new loan to pay off multiple credit card balances. The goal is to reduce your interest rate so that more of your monthly payments go toward the principal balance. But while consolidating debt can be a smart move, it’s not always a quick fix, and you have to be approved first. So, is it hard to get approved for credit card debt consolidation? That’s what we’ll answer below.

Facing high amounts of credit card debt? Learn about your best debt relief options now.

Is it hard to get approved for credit card debt consolidation?

The short answer is: It can be, especially when it comes to traditional borrowing methods. While most banks and credit unions offer debt consolidation loans, the approval criteria can be stringent. Most require applicants to have at least a good credit score (usually 670 or higher), stable income and a relatively low debt-to-income (DTI) ratio to qualify. 

The logic behind these requirements is simple: If you’re struggling with high debt, insufficient income or credit issues, lenders typically see you as a risky borrower. This cautiousness is especially pronounced in times of economic uncertainty when lenders tend to tighten their approval standards even further. But for those already struggling, these requirements can present a significant hurdle. 

It’s important to note, though, that while approval can be difficult, it’s not impossible. Those with strong credit profiles and stable finances may find the debt consolidation loan approval process to be relatively straightforward. There are also lenders who work with borrowers who have less-than-perfect credit, though these loans often come with higher interest rates to offset the increased risk.

For those unable to qualify for a traditional debt consolidation loan, alternative options exist, including credit card debt consolidation programs offered by debt relief companies. These programs function similarly to traditional debt consolidation loans but often have more flexible approval criteria.

In a debt consolidation program, you work with the debt relief company’s third-party lenders to secure a consolidation loan on your behalf. The funds are used to pay off your existing credit card debts, leaving you with a single monthly payment to the debt relief agency. These loans typically offer lower interest rates than credit cards, potentially saving you money and accelerating your debt repayment timeline.

Though it’s not guaranteed, the approval process for these programs is generally more lenient. Debt relief companies recognize that their clients are seeking help because they’re struggling with debt, and their criteria reflect this understanding. While they still consider factors like income and credit score, they may be more willing to work with those who have less-than-stellar credit or higher debt-to-income ratios.

Take steps to get rid of your high-rate credit card debt today.

Other debt relief options worth considering this fall

While debt consolidation can be an effective solution for many, it’s not the only option available for those struggling with credit card debt. Other options include:

• Debt management plans: A debt management plan involves working with a credit counselor who negotiates with your creditors to secure lower interest rates or waived fees. These programs typically don’t require a minimum credit score, making them accessible to those who might not qualify for consolidation loans.
• Debt forgiveness or debt settlement: With debt forgiveness, you or a debt relief company negotiates with creditors to accept a lump sum payment that’s less than what you owe, reducing your overall debt. Note, though, that this option can negatively impact your credit score and may result in tax implications.
• Bankruptcy: Filing for bankruptcy should be a last resort option, but it can provide a fresh start for those overwhelmed by debt. Chapter 7 bankruptcy can discharge most unsecured debts, while Chapter 13 involves a repayment plan. Both can have long-lasting impacts on your credit.

The bottom line

While credit card debt consolidation is a viable option to consider if you’re dealing with expensive card debt, qualifying for it can be challenging, particularly through traditional lenders. However, credit card debt consolidation programs offered by debt relief companies could offer a more flexible route. Plus, there are other options, like debt forgiveness or debt management, that can provide alternative paths to tackling your card debt. So, if you find it difficult to qualify for traditional debt consolidation, do your homework and find the best option for your unique circumstances.