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PROBABLY BY THE END OF THE MONTH.....SO IF YOU ARE CLOSING SOON YOU MIGHT WANT TO TRY AND HOLD OUT A LITTLE BIT LONGER....JUST MY 2 CENTS...............
It is not a direct correlation between what the Fed does and what mortgage interest rates are. There have been times that the Fed has dropped rates and the 30 year rates have gone up..and vice versa.
Now the WSJ Prime rate does move directly with the Fed rate. The WSJ prime rate is the rate that most HELOCs are tied to.
30-year rates most directly follow the 10-year bond yield, not the Fed....(sorry, I get a little 'mortgage-geeky' sometimes)
Actually I agree...IMO they will go down. In fact we've been trending downward for the past few months and are very near the lows of 2003 where a 30-year note was in the upper-4% range. Today's rates ended down at 5.25%
When the FED lowers the fed funds rate/discount rates, the mortgage rates GO UP!
The reason the FEDs lower the rates are to 'stimulate' the market.
If the market goes up...the mortgage rates go up.
If the market goes down then the mortgage rates go down.
Just recently we have been having downfalls in the market....watch the mortgage rates....they have been going DOWN.
Not true...if you look at historical graphs, just even going back a couple years, and compare Fed moves on rates vs the 10-year bond yield (which gives the best indication of 30 year rates), you will find that sometimes they move together and sometimes they don't.
The FORCES that cause both the Fed to act and the 10-yr bond yield to move are similar...inflation reports, jobs reports, etc.
FED follows the Market/BOND Yields...not the other way around.
For Example
09/11 we had a market crash...and Greenspan lowered the fed funds rates/discount rates.
In the last quarter we had market downfalls from the subprime mess..and the FED wanted to stop recession as they are trying to do now..and they lowered the rate.
FED tries to stop the recession by lowering the rates which affect 2nd mortgages, HELOCs, Student Loans, credit cards, and auto loans.
When the FED lowered the discount rates all the way down...this stimulated consumer spending..and this is why the market went up to almost 15,000 points. If the 10yr bonds go down...you will see the mortgage rates go down. Remember the FED wouldn't have lowered the rates if they didnt see the economy going down. When they saw too much spending they lifted the rates to control the market.
Quote:
Originally Posted by ChipL
Not true...if you look at historical graphs, just even going back a couple years, and compare Fed moves on rates vs the 10-year bond yield (which gives the best indication of 30 year rates), you will find that sometimes they move together and sometimes they don't.
The FORCES that cause both the Fed to act and the 10-yr bond yield to move are similar...inflation reports, jobs reports, etc.
PROBABLY BY THE END OF THE MONTH.....SO IF YOU ARE CLOSING SOON YOU MIGHT WANT TO TRY AND HOLD OUT A LITTLE BIT LONGER....JUST MY 2 CENTS...............
Just curious if you are a Mortgage or Finance Professional? Because if you look at the trend of what happens when the Fed cut rates you would know this is not the advice to give to consumers. In addition, there are often penalities assocaited with closing late if you are already in a contract.
Location: Georgia, on the Florida line, right above Tallahassee
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I'd say the best thing to do would be to call off the deal, if you are closing soon. You'd lose your earnest money, though. And other fees as well, perhaps tallying up to a few thousand dollars.
Then again, considering that the housing market drops say, a measly 5 percent
or so this year, then the savings on NOT buying a $350,000 home would be 17,500 dollars. I guess the question is, can you afford to lose your closing costs to save thousands more?
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Chip I Know
