Lower Fed Rate Means Opportunities on the Rise

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Mortgage and Lending with Land Home Financial Services
Lower Fed Rate Means Opportunities on the Rise

For the first time in more than four years, the Federal Reserve cut its Fed Funds Rate, which directly impacts millions of American borrowers. And while this important decision has many implications, there's still some debate among experts about what this means to the economy as a whole.

The Federal Reserve meets again in six weeks, and no one is certain how market volatility and inflation concerns will affect their future policy and decision-making. Bottom line: Take advantage of this opportunity while you still can. Call me right away.

  • If you're looking to capture a lower interest rate for refinancing or buying a home, this could be your best opportunity to do so.
  • If you have an Adjustable Rate Mortgage, while this rate cut might help to improve your situation, now is the time to refinance into a fixed-rate loan.
  • If you have a Home Equity Line of Credit (HELOC) or credit cards tied to the Prime Rate, the Fed's cut in the Fed Funds Rate just put a little money in your pocket.

Borrowers waiting for a lower fixed-rate mortgage may be waiting for a long time. The chart below clearly shows how Fed Funds Rate cuts do not translate into cuts in fixed-rate mortgages. In January 2001, the Fed Funds Rate was at 6% and 30-year fixed rates averaged 7.03%. By December 2001, following 4.25% in cuts throughout the year, home loan rates were actually up to 7.07%.

Yes, we may experience some temporary improvements in rates in the coming weeks, but the markets will remain volatile as long as inflation and recession are a possible threat to the Federal Reserve's long-term economic policies.

If you're looking to refinance or buy a new home, call me. I will show you why waiting can cost you a lot of money.  Call Darren Orshoff at (909) 856-6878 or email me at darren@971roundtable.com

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Rainmaker
1,525,539
Sam Miller
RE/MAX Stars Realty - Howard, OH
Knox County Ohio Real Estate Specialist

Your graph tells an interesting story to those who have not watched the economy.  Many consumers believe just because the fed rate is cut that 30 year mortgage rates will come down equally and this is obviously not the case.  I am interested to see how the media takes this story and runs with it.

Sep 18, 2007 03:52 PM #1
Rainer
11,647
Gareth Bourriague
Benchmark Mortgage of Louisiana - Baton Rouge, LA
Benchmark Mortgage

Darren, I can't convey enough how thankful I am for your post.  I will be posting links to your blog in my comments to all the realtors who are screaming "YAY!  Now mortgage rates will drop!"

You are dead on - we had a rate increase after the announcement was made.

Sep 18, 2007 03:52 PM #2
Rainmaker
508,087
Ann Heitland
RE/MAX Peak Properties - Flagstaff, AZ
Flagstaff Real Estate - Associate Broker, GRI, CRS
I was expecting a quarter or none. This seems needlessly inflationary and therefore is likely to raise mortgage rates!!
Sep 18, 2007 09:41 PM #3
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Rainer
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Darren Orshoff

Loan Officer, Certified Mortgage Planner
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