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Mortgage Rates & the Fed
Old 12-01-2007, 07:40 PM   #1
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Mortgage Rates & the Fed

I have an ARM resetting in 1.5 years. Should I assume there will be a direct correlation between the recent and upcoming Fed Rate Cuts and a decline in mortgage rates? I'm trying to figure out the best time to lock into a 15 or 30 year fixed. Any advice?
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Old 12-01-2007, 07:47 PM   #2
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Here's an article on the relationship between the discount rate and mortgage rate from the San Francisco Federal Reserve Bank.
What is the relationship between the discount rate and mortgage rates? (06/2002)
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Old 12-01-2007, 07:50 PM   #3
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What is your current rate? What would it adjust to if it floated today? The diffenerence between the two should tell you how urgent refinancing is.

Do you fit into the "box" of a conforming mortgage? If so, this probably isn't a bad time to refi to a fixed rate, although I wouldn't pay points to lower the loan rate (so it would be less painful to refi down the road). If you don't qualify for a conforming mortgage for some reason, I would wait to refi. If you can even get a non-conforming mortgage, you will pay through the nose for it. Better to wait until things calm down in the mortgage market and then refi, assuming you cannot get a conforming loan.

Fed actions have little to do with 15 and 30 year fixed mortgage rates. The fed only sets short term rates. 15 and 30 year fixed loans are based on longer term rates, which are set bythe market.
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Old 12-01-2007, 08:19 PM   #4
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I've got a great ARM rate today.....4.875%, but it is interest-only. Current mortgage is for $476,000 but we have the resources to pay a lump sum amount to get us to "conforming" once we refi.

I guess we should plan to sit tight for a while knowing that all my cash is making 5+% just sitting in a savings account today......agree?
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Old 12-01-2007, 09:00 PM   #5
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I thinkyou are about right. Of course, rates could go up in the next 18 months, so I would keep an eye on conforming mortgage rates and jump when you think its a good idea. A 15 year rate of 5% or less or a 30 year rate of 5.5% or less would probably be a reasonable time to jump. Just make sure you keep the necessary amountto cut the balance down to conforming in a relatively liquid account.
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Good Mortgage rates
Old 12-07-2007, 11:46 PM   #6
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Good Mortgage rates

Try US mortgage rates offers free, objective mortgage information and current mortgage interest rates for US home owners and consumers.
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Old 12-08-2007, 08:09 AM   #7
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Quote:
Originally Posted by Winston Lennon View Post
Try US mortgage rates offers free, objective mortgage information and current mortgage interest rates for US home owners and consumers.

Good? You're high, or just an internet spammer. Those rates absolutely suck.
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