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When the Fed cuts interest rates, how long does it take to reflect in mortgage offers?
joe71284 asked:
I’m looking for mortgage rates online and want to build modular next year, now just looking for the best deal and wondering when today’s Fed actions will be reflected in the offers I find.
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5 comments to “When the Fed cuts interest rates, how long does it take to reflect in mortgage offers?”
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30. June 2009 at 2:54 pm :
It probably won’t take effect until the first of next month. I know that’s how my HELOC is effected.
3. July 2009 at 1:16 pm :
Cuts in daily interest rates from the central bank to the commercial banks do not directly translate to mortgage rates if we are thinking of fixed rate long term mortgages.
What drives mortgage rates is the long term rates for bonds and GICs. As banks have to pay less for funds from those sources they can cut long term mortgage rates.
We can find examples of long term rates moving in exactly opposite directions compared to daily interest rates.
6. July 2009 at 2:23 am :
You are assuming that the two are related, and they are not.
The only thing it affects is the prime rate which has an influence on the ARM rates, however, the mortgage company DOES NOT have to lower rates because the feds do, and in fact, they have not been.
Who do you think has to pay for all of the foreclosures? The banks are going to recover in new loans and ARM’s that it has on the books.
6. July 2009 at 11:05 am :
What Mary B said…probably won’t affect the rates.
8. July 2009 at 10:55 am :
As the others said, probably not much effect of rates.
My question to you is, why aren’t you shopping locally for rates? Local lenders will have access to great local programs you may qualify for that internet lenders won’t know about.
Also, when you are looking for the best deal, make sure you compare closing costs. I had a client that got a great rate from an internet lender you see on TV every day. However, the closing costs were over double what a local company was charging. This could have costs them thousands of dollars had they not checked. Some won’t call the transaction fees attached “closing costs” – they advertise low or no closing costs.
Just make sure you are comparing apples to apples.