Fed interest rate cut

rskarvan

My point exactly.

rskarvan

Federal Reserve Act:

To provide for the establishment of Federal reserve bank, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.

- Dated Dec. 23, 1913.

>>> So, the FED must take responsibility for the sub-prime mess because they failed to effect adequate supervision of the banks?

rskarvan

Deleted.

shack

The vast majority of consumer mortgage loans are outside the perview of the banking system regulators. While the banks are major players, private mortgage companies generate most of the loans and non banking investors purchase most of the loans in the secondary market.

Since you want the government to somehow be responsible for everything, we could just socialize it...then you could be a happy camper. BTI

rskarvan

I already am a happy camper. You make a very valid point about the mortgage loans originating outside the banking system. The FED certainly shouldn't regulate private money lending in a secondary market.

PhantomOG

Damn... Wachovia is advertising 30 year fixed rates at 5.00% today. :eek:

danger boy

I"m currently in the process of refinancing my home.. yay... great rates to be had. it's a no brainer in my case.

shack

PhantomOG wrote:

Damn... Wachovia is advertising 30 year fixed rates at 5.00% today. :eek:

The feds action brought the rates down .25%± from last week. Be sure you are aware that Wachovia's advertised rate includes a 1% origination fee. Now is probably a good time to refinance. Rates might come down a little...but not much. You might wait to see what happens at the end of the month (another fed rate drop) but it may or may not have any effect on mortgage rates. It may not be worth the risk to try and time another .25/.50% drop.

Strong Bad

PhantomOG wrote: »

Damn... Wachovia is advertising 30 year fixed rates at 5.00% today. :eek:

Attention K-Mart shoppers, blue light special in the mortage rates aisle!

For all the negatives going on in the mortgage arena, ya gotta look at the positives.

For those looking to refinance, it's looking very good for you.

For those of us (my case) who have sat on the sidelines watching and waiting, we can really come out of this with a solid rate on a fixed traditional loan on a nice piece of property.

Treasury Secretary Shack, any thoughts?

PhantomOG

shack wrote: »

You might wait to see what happens at the end of the month (another fed rate drop) but it may or may not have any effect on mortgage rates. It may not be worth the risk to try and time another .25/.50% drop.

I was probably going to wait until the end of the month. I guess its possible it could go up. I hope not.

danger boy

shack wrote: »

The feds action brought the rates down .25%± from last week. Be sure you are aware that Wachovia's advertised rate includes a 1% origination fee. Now is probably a good time to refinance. Rates might come down a little...but not much. You might wait to see what happens at the end of the month (another fed rate drop) but it may or may not have any effect on mortgage rates. It may not be worth the risk to try and time another .25/.50% drop.

good advice Shack.. and i am waiting till the end of the month.. but if they don't cut the rates again. i think i can lock in 5.075% now on a 15 yr loan.

shack

I would jump now. It is the best of times for someone looking to buy a home...IF you don't have to sell a home first and have good credit.

It is a buyer's market with some prices down 20% or more and cheap money. DON'T wait very long to see if they go down more. A bird in the hand...so to speak.

66chevyIISS

yes, the buyers market is killing my refi! We looked into refinancing our house a few months ago to consolidate our 80/20 loan. Our house would of had to appraise at 500K and was currently around 489K so we decided to hold out. This was probably good because now the houses are appraising down in the low 460s thanks to a couple that have been on the market for 5 months and they keep dropping the price.

So now were looking at just refinancing the 20% into a lower fixed rate. (currently a variable at 8%). good ol economy! I'm just glad were not **** backwards in our house like I am sure some of our neighbors are that purchased last summer for rediculous prices.

PhantomOG

How are you arriving at the appraisal value? Just by the list price for house on the market in your area? I'm trying to determine an approx appraisal value for my house for a refi as well.

66chevyIISS

It's nice to have an appraiser friend who can pull comps for you, but a great website you can use it www.zillow.com. Will give you a good idea on what it might appraise for. You can also search comps on that site to see what other houses in your area recently sold for.

SKsolutions

Before you spend time and/or effort, check your existing mortgage. You may have prepayment penalties or time restrictions.

PolkWannabie

Prepayment penalties ? ... I thought those had been made illegal a couple of decades ago.

SKsolutions

Perfectly legal. Have seen it snuck in more than a few times.

SKsolutions

Copied and pasted from my weekly market update: 1/26/08

Mortgage bond prices fell last week pushing mortgage interest rates higher. Trading was volatile following the unexpected Fed rate cut. Bonds were positive the beginning portion of the week buoyed by a struggling stock market. In a surprise move, the Fed lowered the federal funds rate 75 basis points to 3.5 percent to help the struggling economy. This came ahead of the scheduled Fed meeting January 30th. Stocks reversed the negative trend posting gains following the Fed move. Unfortunately this caused mortgage bonds to suffer and pushed rates higher. For the week, interest rates on government and conventional loans rose by about 1/2 of a discount point.

Based upon the January 25 market close, the 30-Day Federal Funds futures contract for the February 2008 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 3-1/2 percent to 3-1/4 percent at the FOMC meeting on January 30.

In addition, the 30-Day Federal Funds futures contract is pricing in a 70 percent probability of a further 25-basis point decrease the target rate to 3 percent (versus a 30 percent probability of just a 25-basis point rate decrease)

All eyes will be focused on the Federal Open Market Committee meeting Tuesday. A rate decrease is expected. However, the magnitude of the change remains uncertain.



Keep in mind that a Fed rate cut does not automatically mean mortgage interest rates will improve, as was evident the latter portion of last week. The Federal Reserve has direct control over the level of short-term interest rates. The Fed’s influence over longer-term interest rates is less certain.
A cautious approach to float/lock decisions is prudent heading into the Fed meeting this week. Be prepared for potential market volatility.

There are indicators that show some promise and those that are down. If it's worth the refi or purchase, I'd try to lock in soon. If bond prices fall, rates will go up despite what the Fed does with short term rates.

Face

Please go down, please go down...

SKsolutions

There should be another dip soon, but no one knows for sure. If you can find a reputable lender/broker, and you've done your homework, start the process. Some will lock you in at todays rate, & give you the lower rate if it drops before you close the loan.

PhantomOG

Ok! Let's see those rates drop! I passed last week. I hope it works out for me.

jdhdiggs

Mortgage rates are going up again today. Looks like last Thursday was the best day to do it....

shack

jdhdiggs wrote:

Mortgage rates are going up again today. Looks like last Thursday was the best day to do it....

A functon of demand and bond rates...

As I explained last week the change in mortgage rates isn't necessarily correlated to a change in the discount rate. They haven't moved much but are up about 1/2 percent over the low of last week. I would suggest NOW is a good time to get locked in, because the rates are VERY good, even if not at the bottom.

PhantomOG

Yeah... there must be tons of people re-financing. You can't get ahold of mortgage people at the 1800 numbers for major banks.

jdhdiggs

Yup, locked in at 4.5% where, had I had my act together, I could have been at 4% last week... Faaaack!

strider

jdhdiggs wrote: »

Yup, locked in at 4.5% where, had I had my act together, I could have been at 4% last week... Faaaack!

Yes, but isn't it nice to be in a position where you can complain about 4.5%?

jdhdiggs

Hell yeah, paying your bills on time and not overextending yourself has it's perks: Both my Wife's and my credit ratings are over 810 now so that's good to know...

PhantomOG

I've never gotten my rating over 800. Maybe its because I'm only 28 with about 10 years of credit history. I'm hoping my current 750-770 range will be good enough to get the best rates.

AndyGwis

I'm going to be first-time house shopping in the next 1-3 months once my gf gets a job (she just graduated). Need to figure out what location will work best for both of us once she gets hired.

Sounds like I've lucked out with regards to timing. Should be able to get a nice piece of home for my scrilla and a good rate as well.