Trying to fight off a recession the Federal Reserve has cut the short term interest rates another .50%. This takes their benchmark rate to 3%. The Fed has now cut rates by 1.25% in just 9 days. They claim this is to moderate growth but cautions there are risk that still remains.

So what’s up with mortgage rates? Since the FED announcement mortgage rates have climbed. Nationally mortgage rates have climbed .375% since the FED cut rates 1.25%. Why?? Because the rate cut is on short term money, not long term money. It’s meant to stimulate the business sector not the housing sector. I believe the FED will have to lower mortgages rates in the next 60 days to help the housing sector out. One of the main concerns in the mortgage industry right now is the fact foreclosures have risen by 75% over the last 12 months. This causes more risk load that’s factored into current rates. I firmly believe some people looking to buy a home put way to much attention on interest rates. I’m asked several times a day what the rate is?? My standard answer is “depends”. There are still many types of mortgage programs out there. I simply have to know more about your long term goals!

Here are some facts I found interesting on 30 year mortgages that Jim Cramer (Mad Money) published. Did you know that only 28 times since 1971 have rates been below 6%? That means 28 out 444 months were under 6%. Only 2 months have ever been below 5.50%, March 2004 at 5.45%, June 2003 at 5.23%. From November 1978 to November 1990 mortgage rates were double digits nearly every month – including the high of 18.25 in October 1981. So rates shouldn’t be an issue to anyone thinking about buying a home today. If they are, then they’re misinformed or making poor excuses.
Mark my words a turnaround in is INEVITABLE! Buy now!!

This entry was posted on Friday, February 1st, 2008 at 2:05 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.