How will the recent cut by the Fed of the discount rate affect the intrest rates on home mortgages?
If I were to shop around for a mortgage on Thursday, what if anything would be different than the motgage rates that I would find on Monday?
Tags: affect, discount, home, intrest, Mortgages, Rate, rates, recent
It’s not going to affect the mortgage rates for quite some time. The Feds are going to have to do a lot better than that before things get better.
I believe the rate cut that you are speaking of is for the mortgage companies that are in trouble. I do think you will see the rates come down some. Funny to say but people dont realize the rates are still great! I think back to when i bought my first house in 1991, and it was at a 14% interest rate.
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.
The best time to look for a home is when you need one. Don’t let rates dictate your financial decision to purchase a home if this is the right time for you. Besides, RATES ARE STILL LOW!!!!!
Like a previous poster, I purchased my first home in 1983 and had a blended rate of 12.25% when rates were still in the teens. I purchased my current home at 7.25% in 1993. I was able to refinance in 2003 and now have 4.25% FIXED! Yeah for me. But my decision to purchase has never been controlled by rates. My decision to refinance was.
Also – when rates are low, housing prices usually go up because of market activity, so you end up paying about the same amount anyway. Right now rates are low AND prices are low. In my opinion, this is the best time to buy – especially if you’re a first timer.
Good luck to you!
This latest rate cut means more money is available at a lower rate intended to keep inflation down, in my opinion one more rate cut is coming in a different indicies come september. To lock a rate I would wait till September to shop for loan rates relating to a property I’d start now.
you wont see much of a difference that cut has to do more within the lenders themselves not the borrowers..with all do respect to the others that have mentioned rates are still low since they bought there house in the 70′s and 80′s..honestly there is no comparison seeing as the average home price tends to be 400gs plus the cost of living is enormous and back then a house cost around 50gs..its that attitude from realtors and brokers that has added to this mess
a quick web search came up with lots of results but this is the best one i could find for you.