Equity Home Loans

Do you think rates will drop again for home loans?

We are looking at buying a home this year. Do you think because the last Gov cut didn't do as well as they hoped it would that they will drop the rates agian?

Public Comments

1. The reduction in the Fed discount rate does not equate to reductions in the long term market rate, which is where mortgages are tied into. The mortgage rates have been trickling up, though they are adjusting often, but I don't see any significant mortgage rate reductions any time in the near future.
2. Probably not. The Federal Reserve cutting the Federal Funds rate has little to do with mortgage rates. The Federal Funds rate is an extremely short term loan (i.e. overnight) between banks. Mortgage rates are long term loans, which are more influenced by the bond market. I just put a blog post on this exact topic, which explains it in more detail. The website is: http://nwarealestateblog.blogspot.com Interest rates for mortgages are still really low--around 6%. Back in the 80s they were between 15% and 20%, and even in the mid-90s they were about 7%-8%, so consider yourself lucky that you are ready to purchase now rather than in years past.
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