Long term mortgage rates are not dropping with rate cuts from the Fed. Mortgage rates are tied to the bond market. When the stock market is going down, bonds go up (and so do mortgage rates). The rate cuts only affect short term loans at best right now. Their hope is the rate cuts will rally the stock market, sending bond rates down, thus bringing down long term mortgage rates. Well with stagflation a concern, rates cuts might be counterintuitive, just delaying the hangover we have are going to have to face sooner or later, maybe compounding it.
If anyone is waiting on making deals happen because they think they want to go fixed long term, the rates are probably not going to get much lower, so don't wait on that account.
'We have a problem, which is that the spreads between the Treasury rates and lending rates are widening, and our policy is essentially, in some cases just offsetting the widening of the spreads, which are associated with signs of illiquidity,' Bernanke told the House Financial Services Committee.
'So in that particular area, it's been more difficult to lower long-term mortgage rates through Fed action,' he said.