The Federal Reserve is concluding it’s meeting today and it is expected that they will cut the overnight lending rate by .50% to .75%. This action will drive that particular interest rate to the lowest level that has been seen in about a half a century. Amazing stuff truly, but what impact will this action have on mortgage rates?
Most people do the quick math and figure that if mortgage rates were 5.50% last week and the Fed cuts by .50% today that rates should be 5.0% right? That assumption is not correct. In fact rates often move up when the Fed cuts though that is not likely today. More information on that phenomenon can be found here.
This time though, mortgage rates are not likely to jump on the Fed news. However, they are not likely to fall either. With the exceptional pain experienced by the mortgage business many loan officer, companies and lenders have exited the business over the last year or so. Right now, everyone still in the market is swamped and if you owned a bank and could sell all the mortgages you possibly could close and fund at 5.5% why would you lower your rates?
The best advice is to find a good deal from a professional mortgage planner, understand the numbers and if they make sense, do the deal. There is no way to guess if rates are going to go lower and save you an extra $32 per month. If you are already saving around $100 per month don’t gamble the potential savings. Once this market turns around you will pay that cost for a long time. If you have any questions or want to run the numbers, contact your America’s Mortgage Choice professional today.
