Federal Rate cut

Prime rate is down .75% meaning all the short term interest rates are down .75% (car loans, credit card rates, home equity lines of credit)
Credit is cheaper to obtain wich means more people will have opportunity to get more opportunity to get credit based on their salary.
Long term mortgage rates will also be positively affected but not right away and likely not to the same extent.
The intention is to make the credit more awailable and affordable to boost the United States Economy.

The rate cut was for the overnight lending rate for banks. The mortgage rates change daily based on ecomomic data. By the time the fed cuts rates, it's already priced into the mortgage rates.

Many times, it causes mortgage rates to go up since people feel that the ecomony will improve because of it. When the economy improves, rates go up. When it goes down, rates go down to stimulate borrowing. Even how people feel about the economy is part of the economic factors that go into pricing mortgage rates along with other data such as unemployment claims, retail purchases, etc.

Actually, today rates went up but are still looking good at 5.50% for a 30 year fixed rate mortgage with zero points.

Yes, the primary aim behind the Fed rate cut is to make more and more credit available to consumers. It's been quite a few months since there has been a decline in certain type of lending. The rate cut is likely to boost such type of credit lending. And, greater lending will boost consumer spending which will thereby have a positive effect on the economy.

The rate cut have led to a decline in rates of fixed mortgages as well as home equity loans which are often available at half a percentage point above the Prime Rate. So, borrowers willing to get out of loans they don't like, especially mortgages with higher adjustable rates can think of shifting to lower rate loans that too fixed rate mortgages.

Regards,

Jessica.

Interest rates are looking good right now.

yah someone on CNBC said mortgage rates are tied for to the mid-term Treasury Bonds..

I assume like the 10 year treasury bond, that has been in a downtrend for a while now too.

Hi guest,

Welcome to the forum.

The fixed rate mortgages (FRMs) are tied to the yields on 10 year Treasury bonds whereas 1 year ARMs are tied to the yields on 1 year ARMs.

Currently the yields on 10 year Treasury Bonds are indeed going low as a result of which rates on FRMs are lower.

Thanks,

Jerry

if the federal can keep the rate on check for some time, i believe the market will become healthy and more borrowers will opt for refinance, so the liquidity will increase.

I just hope it really does do the trick in avoiding the dreaded R word.

Wal-Mart made a public statement that they have their own stimulous plan and have cut back on prices by 30%.

I could not help but giggle!