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(Oct 29) Today, the Federal Open Market Committee announced that it would whittle its key interest rate by 50 basis points down to 1.00%. The last time the Fed funds rate was this low was June of 2003. But is this a terrible trick or a splendid treat for consumers?
This key interest rate, in turn affects Prime rate, which is typically lowered to ease the credit market and make it cheaper for consumers to borrow money. The Prime rate is often used as an index in calculating short term loans such as auto loans, home equity lines of credit, and credit cards.
Whether or not this cut is going to improve the current struggling economy is anyone’s guess. For instance, historically, mortgage rates tended to correlate with the Fed funds rate, but as of late, this has not been the case. The best way to keep an eye on mortgage and equity rates is to check convenient rate tables regularly.
The effects of the Fed’s decision will have to be watched carefully, but by staying educated and vigilant of what current rates are, you can ensure you get the sweetest deal available in any economic situation.
Oct 8, 2008 - Today, as part of a worldwide effort to ease the effects of the current economy, the Federal Reserve Board enacted an emergency interest rate cut of 50 basis points. The Fed funds rate is the key interest rate used to influence market conditions. This cut leaves the Fed rate at 1.50%. Informa Research Services, Inc. informs consumers about what to do in these rare economic circumstances.
This is the second time this year the Fed rate has been adjusted prior to a scheduled Fed Board meeting. The last unscheduled cut was made January 22 when the key interest rate was cut by 75 basis points to 3.50%.
While there is no direct link between the Fed rate and mortgage rates, historically, mortgage rates have tended to follow the Fed rate. However, as of late, that has not been the case. Thus, the best bet for consumers is to check online rate tables regularly to keep an eye on where rates are and where they might be going.
If mortgage rates fall as a result of this move by the Fed, it may be a good opportunity for consumers to purchase or refinance their home. First time homebuyers may find it is a good time to purchase, especially with homes becoming more affordable. To ensure they are getting the best deal for their unique situation, consumers should do their research and shop around before choosing a loan product.
Consumers should take their time and do their research before rushing into any lending decisions. They should look for the best possible deal that suits their financial situation.
Just One Click = Current Mortgage Rate Charts
Freddie and Fannie Won't Fall, But Will Mortgage Rates?
Source: Informa Research Services
In light of the U.S. Department of Treasury's action to place government sponsored enterprises, Freddie Mac and Fannie Mae, into a conservatorship, one has to wonder, "What does this mean for me?"
Many experts have speculated that this decision could lead to lower rates on various mortgage products. Thus far, there has been no overwhelmingly significant change in rates overall. Over the past week, the average rate 30-year fixed rate mortgages offered by major financial institutions have dropped 22.6 basis points from 6.761% to 6.535% according to Informa Research Services. If rates continue to drop due to this takeover, this may create some excellent opportunities for homeowners and prospective buyers alike.
For homeowners who have been waiting to refinance their mortgage, this may be a good opportunity to take advantage of lower rates. To ensure you secure the best deal, be sure to shop for the best rates.
To qualify for the best rates, be sure to maintain excellent credit. To keep tabs on your credit, look into free credit monitoring tools, such as Credit Karma (www.creditkarma.com). Credit Karma allows users to securely check and monitor their credit score on a regular basis.
No one can say for sure exactly how the takeover of Fannie Mae and Freddie Mac will affect rates long term, but the best way to stay on top of rate trends is to check rates regularly. By using online rate comparison tables, checking rate trends is only a click away!
According to Informa Research Service’s Interest Rate Review®, the national average APR on a 30 year fixed mortgage rose 74 basis points over the past 6 months (from 6.00% to 6.74%). Because we are in a rising rate environment, how can you ensure you get the best rate on your mortgage home loan? Lock your rate.
When beginning your loan application process, you have the option to either lock or float your rate. By locking your rate, you are opting to commit to the rate and points option available at the time of the lock. Locking in your rate is one way to ensure the rate on your mortgage is not higher than expected upon loan closing. This option can help offset the volatility of an uncertain market.
The other option is to float your rate. Floating your rate means that you choose to lock-in your interest rate at some time after application, but before settlement. The borrower becomes more vulnerable to market volatility and fluctuations in rates. The advantage would come if you wait to lock-in and rates decrease, you may get a more favorable rate.
In a rising rate environment, locking in your desired rate early guarantees that your rate does not rise during your loan application process.
You should also consider the rate environment when you are choosing a type of mortgage product to finance your home purchase. Even though their introductory rates may seem very attractive, if you opt for an adjustable rate mortgage (ARM), you may be slammed with a huge rate increase in the future when your rate adjusts if rates continue their upward climb. Because of this, a fixed rate mortgage may be the smarter choice if rates continue to rise. To stay on pace with current mortgage rate trends, refer to online rate trending graphs and check regularly.
Even though rates are rising, locking in a rate early and choosing the correct mortgage product should help reduce some of the risk associated with getting a mortgage in the current rate environment. You should always be sure to shop around to find the best rates and terms that meet your needs. Find the best deal locally by searching online rate tables. Be sure to consult your loan adviser to ensure you are getting the best rate and product for your individual situation.
Fannie Mae & Jumbo Mortgage Rates Just One Click!= Current Rate Chart
Today, for the first time in nine months, the FOMC announced that it would not lower the Fed Funds Rate, the key interest rate set by the Federal Reserve. So what does this mean for mortgage rates?
While there is no direct tie between the Fed Funds rate and mortgage rates, historically the two rates tend to correlate over time. But as of late, this trend has not held true. For instance, even though the Fed lowered their key interest rate 25 basis points on April 30, the national average rate on a 5/1 ARM continued to rise 51 basis points from 5.29% on May 6 to 5.80% on June 24 (Source: Informa’s Interest Rate Review®).
Save money by refinancing before rates climb higher
If this trend continues, how long can you afford to wait before refinancing out of your adjustable rate mortgage into a fixed rate loan? A 50 basis point increase in your mortgage rate from 6.00% to 6.50% could increase your monthly principal and interest payment on a $200,000 mortgage from $1,199 to $1,264 a month. Securing the lower rate in this scenario could save you $65 a month, or $780 a year. Shop online to find the best available rates in your area.
Since mortgage rates seem to be rising despite Fed interest rate cuts, one smart way to keep up on how rates are changing is to check rate comparison tables regularly. Checking national average rates can give you a quick snapshot of how rates are changing, and perhaps, some insight into where they are going.
Times are Anything But Boring for the Fed
As the scheduled FOMC meeting gets underway on June 24th-25th, what direction should the Fed decide to take next? It’s quite a dilemma at the Fed, for if they were to raise rates, that could further dampen the condition of an already weakened economy and yet to lower rates again, would only serve to ignite the inflationary pressures evidenced by high fuel, food and many other commodities prices, it is also apparent in the unstable U.S. dollar. It would seem that the Fed is far more likely to tip the scale in favor of addressing the threat of inflation rather than that of the deteriorating economy. The sinking dollar, in conjunction with surging energy prices, may pose a more serious threat to the country’s overall economic health at this time. However most Fed watchers have not expected a rate increase to come out of the Fed until the end of the year, or possibly into next year, following the November elections. Currently it seems that nothing can go right with the economy sinking, inflation soaring and natural disasters mounting (such as the massive flooding occurring in the mid-west) while the financial markets are tumbling, all occurring in the midst of an election year where a wait and see approach may prevail as the country changes course both politically as well as economically.
Fannie Mae & Jumbo Mortgage Rates Just One Click!= Current Rate Chart
The quick and easy answer is that you should see a slight drop in adjustable rate mortgage (ARM) rates but fixed rates should remain relatively unchanged.
In loose correlation with the fed rate, ARM rates peaked in September 2007 (with the national average for a Jumbo3/1 ARM at 6.848%) and fell by an average of 16 basis points in October 2007. Rates stabilized in the three months following, averaging 6.389% for the Jumbo 3/1 ARM’s nationally. The lowest mortgage rates occurred in February 2008 (5.995%), which mirrored rates from the previous year in March 2007 (5.994%). Overall, March 2008 rates are displaying a slight increase (of about 0.125%) compared to rates only one year ago.
Based on the latest fed rate cut, adjustable mortgage products may remain stable or reflect a slight change. Use convenient rate tables to stay updated on the rates currently available in your area.
Fixed-Rate Mortgages: Types and Benefits
In a time when the housing market is violently fluctuating, the economy is declining, and credit is tight, homeowners and borrowers are looking to the relative safety and security of fixed-rate mortgages.
These mortgages have always been a classic and popular option for their simplicity. When a borrower takes out a fixed-rate mortgage, they are receiving a locked interest rate for the term of the mortgage. No adjustable, changing rates; no movement to track or fret over. Over the life of this home loan, the borrowers pay a monthly payment that never changes, allowing homeowners to budget better and be prepared.
A monthly payment for a fixed-rate mortgage is comprised of two elements. Borrowers pay towards the principal, or the actual loan amount. They also pay interest on the principal, with the amount determined by the fixed interest rate. This interest is a tax-deductible expense, providing homeowners a significant advantage come tax-time. Over time, by paying towards the principal homeowners build equity, or ownership, in their home. Eventually, equity can be accessed as a source of funds, used for home repairs, college costs, vacations, or other options.
The most common terms for a fixed-rate mortgage are fifteen and thirty years, but in recent years other options have become available, including 10
