FAO People in the Finance/Mortgage Industry

[toasty]

What's the wisdom on what mortgage rates are going to do in light of the Fed's recent cut? Thinking of doing a refi, wondering if they are likely to go down further, and if so, how long it takes after a fed cut for rates to adjust. I realize that they aren't actually tied in the technical sense, but I thought that fed cuts could trigger changes in mortgage rates, so wanted to get the insight of those that know better than I...

danke

[thesightless]

Re: FAO People in the Finance/Mortgage Industry

mtg rates are not tied any way to the fed fund rate.

they are tied, in an inverse rate, to the 10 year fed bond.

you want the bond in the high 4's USUALLY(up until last may/june), but given the complete willy wonka bitch slap to the economy, its hold around 2.1 % and the rates are still staying low around high 5's low 6's depending on documentation and income.

[Jenks]

Re: FAO People in the Finance/Mortgage Industry

i have a 30yr @ 5.25%, and i don't see anything out there beating that at the moment, but i've wondered with rates dropping like flies.

[toasty]

Re: FAO People in the Finance/Mortgage Industry

mtg rates are not tied any way to the fed fund rate.

I know they aren't tied, but does a change in the fed rate tend to have any impact upon mortgage rates whatsoever?

[thesightless]

Re: FAO People in the Finance/Mortgage Industry

there isnt. but if your income is sound, inquire about a bi weekly payment system that applies to princinple early and you will save a load of money and knock a few years off. it is actually better than 13 payments a year.

[thesightless]

Re: FAO People in the Finance/Mortgage Industry

I know they aren't tied, but does a change in the fed rate tend to have any impact upon mortgage rates whatsoever?

not really, the fed fund rate is what shores up balance sheets for short term lending. think "its a wonderful life"'s money analogy but on a giant scale. i mean, they may drop a quarter point, but i doubt it . these securities are long term debt/

[toasty]

Re: FAO People in the Finance/Mortgage Industry

i have a 30yr @ 5.25%, and i don't see anything out there beating that at the moment, but i've wondered with rates dropping like flies.

You're in good shape there, I think. I happened to buy my place during an uptick in rates, and got it at 6.375%, so the rates right now are in that range where I start to give it some thought.

[thesightless]

Re: FAO People in the Finance/Mortgage Industry

ill call a friend for the wholesale rates and let ya know.

[shosh]

Re: FAO People in the Finance/Mortgage Industry

toasty... give me 2 mins ill pm you a couple of rate sheets

[Miroslav]

Re: FAO People in the Finance/Mortgage Industry

not really, the fed fund rate is what shores up balance sheets for short term lending. think "its a wonderful life"'s money analogy but on a giant scale. i mean, they may drop a quarter point, but i doubt it . these securities are long term debt/

Behold, he speaks the truth!!! I don't work in the finance industry, but I recall this point being made by a professor in class a year or two ago. It's a very prevalent misconception that lower Fed Funds automatically = lower mortgage rates. Mortgage rates happen to have been declining right now around the same time the Fed Funds rate was cut, but that doesn't always necessarily have to be the case every time Fed lowers rates.

There will be a crapload of refinancing, though, and it's probably not a bad time for it. As for whether rates will go lower...I dunno, but I would guess that they won't jump upwards anytime soon as we have much greater risk of deflation these days than inflation - another reflection of the horrible economic circumstances we're in.

[day_for_night]

Re: FAO People in the Finance/Mortgage Industry

^
|
yes. fed funds = short term borrowing (30 days max, if i remember right)
mortgage = long term borrowing, hence based on long term bond rates.

long term rates and short term rates sometimes move together, sometimes not. the shape of the yield curve (the interest rate being charged over various different maturity bonds) can be any shape. it can be upward sloping (normally it is)...this means that short term rates are lower than long term rates. it can also be flat, or even inverted. and pretty much any shape in between based on conditions in the lending market and the economy.

hope that made some sense...

[shosh]

Re: FAO People in the Finance/Mortgage Industry

some lenders' rates went up today

jus sayin

[Huggie Smiles]

Re: FAO People in the Finance/Mortgage Industry

i nearly posted this question too! weird.
I'm at 6.25 - looking for a 5.25 would be great! (over the life of the loan)

what is the deal with the 2% rule? hard and fast or depends on closing costs?

[neoee]

Re: FAO People in the Finance/Mortgage Industry

i have a 30yr @ 5.25%, and i don't see anything out there beating that at the moment, but i've wondered with rates dropping like flies.

I've been considering a refi like many others. The news reminded me that I needed to check the current rates. Currently I have a 30yr @ 6.5 but today my same financial institution shows 4.614% on a 30 year. Of course I'm also considering reducing the term (not taking any equity out and just taking advantage of the better rate) possibly down to a 15yr which currently shows 4.579%. I'm just wondering if/and how much lower we might see rates go.

On the flipside though my CU also offers a 40yr fixed now and since I'm not planning to stay in this house the rest of my life, it might make more sense to do the 40 with plans of renting the house out in the future.

Edit: Yikes! The 40yr fixed I mentioned is 7.290% At least for me, I'm better off with my current 30 (the payments on the 40 would end up being more).

[shosh]

Re: FAO People in the Finance/Mortgage Industry

guys, if youre not looking to cash out, see if you can get a loan mod instead of a refi... rates are insane for loan mods