Comments on: How Does a Fed Cut Affect Home Mortgage Rates?

By: T. W

T. W — Fri, 28 Aug 2009 20:41:05 +0000

what's the terms of your mortgage? If you are tied to a short term index it will help when it resets. Then you may have to wait until the reset date, which may only occur once a year.

By: Eska9984

Eska9984 — Thu, 27 Aug 2009 12:35:22 +0000

Very informative video.

Thank you.

Keep them coming!

By: helloface1969

helloface1969 — Thu, 27 Aug 2009 12:16:31 +0000

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By: dasielady

dasielady — Thu, 27 Aug 2009 07:35:29 +0000

Most likely it won't. The Fed rate isn't strongly correlated to mortgage rates.

Mortgages are more strongly correlated to T-bill rates, such as the 1-year T-sec. These go up and down depending upon how much money the govt. lends and how many people want to buy our bonds. It's determined more by China and Saudi Arabia than the fed. The reason for the strong correlation is that mortgages 'compete' with T-bills for money. Both are long-term, relatively safe places to earn some interest income.

–>Adam

By: BigStorm37

BigStorm37 — Thu, 27 Aug 2009 06:29:11 +0000

In 1983 I bought a home with a 13% interest rate. They had just gone down from 18% so they were great!

Today interest rates on homes are terrific. The Fed rate cuts only effect short term rates. Mortgage rates are more dependate on what the investors believe inflation rates will be over the next 10 years or so (statisticaly the life of most mortgage loans). Anything that makes them believe the inflation rate will be higher or lower will change your interest rate.