Fed Drops Rates Again by 0.5%
Jan 31st, 2008 by Ginger Wilcox
The Fed dropped rates another half percent yesterday. “Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity,” the Federal Open Market Committee said in a statement Wednesday.
Does this mean home mortgage rates will drop? NOPE! As I have explained before, The fed rate cuts do not directly impact mortgage interest rates, but it does impact homeowners with equity lines of credit (HELOC), people who carry credit card balances and other short term loans. Sometimes these rate drops actually cause home mortgage rates to increase slightly.
The Fed is hoping consumers will spend money on their credit cars, or use their HELOCs, which pumps money into our economy.
What’s next? Waiting to see…
I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.
Eric Hundin
Ginger, while the Fed rate cuts don’t immediately or directly impact mortgage interest rates, most homebuyers are not aware of that information. Everyone I’ve spoken with recently says “oh yeah, mortgage rates have been coming down.” In reality, the mortgage rates have been going down and I’ve been getting more calls from homebuyers ready to start looking for homes in the last couple of weeks, as have many of my colleagues.
Brian, rates are excellent, but the cuts don’t have a direct correlation. In Marin County, they haven’t meant much at all for the jumbo loans as the spread between conforming and jumbo interest rates continue to increase. Despite that big spread, I find it interesting when I hear some people say jumbo loan rates are HORRIBLE. Well, they are more than one percent higher than conforming, but horrible? Not hardly. 9, 11 or 14%? THAT is horrible!
Thanks so much Eric. I glad you found the site! I always love to “meet” a fellow blogger.