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mtnmama
Member since 5/06 4794 total posts
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Message edited 7/14/2009 9:28:28 AM.
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Posted 9/18/07 3:12 PM  |
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Mrs-D-Girl
Love my fur baby
Member since 8/07 5183 total posts
Name:
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Re: Great news - Feds slash rates !!
The effect of this, is it raised long term mortgage rates today.
Message edited 9/18/2007 3:48:36 PM.
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| Posted 9/18/07 3:19 PM |
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ali120206
2 Boys
Member since 7/06 17790 total posts
Name:
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Re: Great news - Feds slash rates !!
I found this online:
A Fed rate cut would have a direct effect on consumer debt that's linked to the prime rate -- home equity lines of credit and some credit cards. As for long-term debt, such as fixed-rate mortgages, the connection to Federal Reserve rate policy is tenuous. Sometimes mortgage rates go down when the Fed cuts rates, but sometimes they rise or stay about the same.
Fixed-mortgage rates are determined by the bond market as opposed to federal interest rate cuts so it does not necessarily mean that mortgage rates will decline. The rates actually may rise thinking the fed has taken a "softer" view on the economy.
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| Posted 9/18/07 3:25 PM |
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leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
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Re: Great news - Feds slash rates !!
Yes. Hoping it works out for many people who are going for homes right now! Esp. if you are incorporating a equity line of credit or heloc.
Message edited 9/18/2007 3:26:47 PM.
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| Posted 9/18/07 3:26 PM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Great news - Feds slash rates !!
Posted by Mrs-D-Girl
OK, not such great news for us. The effect of this is it raised long term mortgage rates today.
the lowering of thefed funds rate doesnt have a direct effect on mortgage rates, they are determined by the treasury market.
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| Posted 9/18/07 3:43 PM |
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leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
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Re: Great news - Feds slash rates !!
Posted by Mrs-D-Girl
OK, not such great news for us. The effect of this is it raised long term mortgage rates today.
Right.
If anyone is doing a HELOC or Home Equity in tandem with their regular mortgage, you could see a savings!
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| Posted 9/18/07 3:45 PM |
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Mrs-D-Girl
Love my fur baby
Member since 8/07 5183 total posts
Name:
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Re: Great news - Feds slash rates !!
Posted by leese
Posted by Mrs-D-Girl
OK, not such great news for us. The effect of this is it raised long term mortgage rates today.
Right.
If anyone is doing a HELOC or Home Equity in tandem with their regular mortgage, you could see a savings!
Would this work if you were taking a second Mortgage, like a "piggy back" one?
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| Posted 9/18/07 3:47 PM |
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Goobster
:)
Member since 5/07 27557 total posts
Name:
:)
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Re: Great news - Feds slash rates !!
Can anyone explain this more? I don't fully understand.
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| Posted 9/18/07 3:51 PM |
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Blu-ize
Plan B is Now Plan A
Member since 7/05 32475 total posts
Name:
Susan
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Re: Great news - Feds slash rates !!
Posted by Mrs-D-Girl
Posted by leese
Posted by Mrs-D-Girl
OK, not such great news for us. The effect of this is it raised long term mortgage rates today.
Right.
If anyone is doing a HELOC or Home Equity in tandem with their regular mortgage, you could see a savings!
Would this work if you were taking a second Mortgage, like a "piggy back" one?
yes, it will also have an effect on any other revolving adjustable credit lines.
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| Posted 9/18/07 4:46 PM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Great news - Feds slash rates !!
Posted by Goobster
Can anyone explain this more? I don't fully understand.
when the fed "raises or lowers rates", they are changing the discount rate, which is the rate at which banks borrow/lend to eachother
when the rate is lower, it is cheaper for banks to obtain liquidity. therefore, they charge less for loans and therefore less on deposits. If you are getting less $$ for your deposits in a bank, you are more likely to take the $$ out of the bank and either spend it (and loans are cheaper so you may borrow) or invest it in the stock market or real estate, which pumps money into the economy.
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| Posted 9/18/07 5:03 PM |
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Goobster
:)
Member since 5/07 27557 total posts
Name:
:)
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Re: Great news - Feds slash rates !!
Posted by Meaghan729
Posted by Goobster
Can anyone explain this more? I don't fully understand.
when the fed "raises or lowers rates", they are changing the discount rate, which is the rate at which banks borrow/lend to eachother
when the rate is lower, it is cheaper for banks to obtain liquidity. therefore, they charge less for loans and therefore less on deposits. If you are getting less $$ for your deposits in a bank, you are more likely to take the $$ out of the bank and either spend it (and loans are cheaper so you may borrow) or invest it in the stock market or real estate, which pumps money into the economy.
Thank you, now i get it!
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| Posted 9/18/07 5:14 PM |
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leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
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Re: Great news - Feds slash rates !!
Posted by Mrs-D-Girl
Posted by leese
Posted by Mrs-D-Girl
OK, not such great news for us. The effect of this is it raised long term mortgage rates today.
Right.
If anyone is doing a HELOC or Home Equity in tandem with their regular mortgage, you could see a savings!
Would this work if you were taking a second Mortgage, like a "piggy back" one?
Yes, it could. If you locked into a fixed rate Home Equity loan and are closing soon, your broker could possibly go back now and renegotiate your rate. If you have an adjustable ARM or HELOC then it will help out those who currently have them on their house or are closing soon.
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| Posted 9/18/07 8:13 PM |
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MsG
Should be working
Member since 5/05 2824 total posts
Name:
G
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Re: Great news - Feds slash rates !!
So if you have a fixed rate it could be raised??
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| Posted 9/18/07 8:33 PM |
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leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
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Re: Great news - Feds slash rates !!
Posted by MsG
So if you have a fixed rate it could be raised??
No. But say you are going for a house now and recently locked a rate. You could possibly get it lowered now with the slashing of the rates.
If you have a traditional 30 yr fixed mortgage, this doesn't affect you right now.
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| Posted 9/18/07 9:08 PM |
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MrsFlatbread
Skinny jeans are in my future
Member since 6/06 10258 total posts
Name:
Baby Momma
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Re: Great news - Feds slash rates !!
so will our Heloc just adjust itself or do we need to do something in order for the rate to drop??? Our second loan on our house to avoid pmi was a HELOC, so I was just wondering!
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| Posted 9/19/07 8:33 AM |
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leese
Sarge!
Member since 5/05 1965 total posts
Name:
Leese
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Re: Great news - Feds slash rates !!
If your HELOC adjusts, it could be affected for the better.
Here is a great graphic from The Wall Street Journal that discusses what could be affected (for the better or worse!)
For the full article on WSJ go here: Article
Message edited 9/19/2007 9:10:14 AM.
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| Posted 9/19/07 8:39 AM |
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riniko
LIF Toddler
Member since 3/06 486 total posts
Name:
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Re: Great news - Feds slash rates !!
Posted by Mrs-D-Girl
The effect of this, is it raised long term mortgage rates today.
I realize that HELOC rates will drop and that conventional rates do not drop. But I was under the impression that it was likely to have a ripple effect to traditional mortgages. Does anyone have any insight into this?
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| Posted 9/19/07 5:02 PM |
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