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Fed funds rate vs Mortgage rates
Old 01-18-2008, 12:49 PM   #1
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Fed funds rate vs Mortgage rates

Fed funds rate is 4.25% right now, I believe (1/18/2008 -).

It has been a while since I needed to get a mortgage... and would consider refinancing if I could find a rate around 5% or less for 30 yr fixed.

Anyone here have (now) or did have (paid off) a mortgage less than 5% without paying points? Do you remember what the fed funds rate was when mortgage rates got that low?

I know mortgage rates track the bond market (treasuries) more than the fed funds rate. If you remembered what the bonds value/yield was when rates got below 5%, feel free to share.

My current mortgage is 30 yr fixed, in year 2, at 5.75%. Credit score is between 750 and 820. It was 780 last time we refinanced.

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Old 01-18-2008, 12:54 PM   #2
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You are looking at the wrong rate for a fixed mortgage. Fixed mortgage rattes trach the 10 year treasury and MBS coupons. When I got my 4.99% 15 year fixed mortgage (with the lender paying every cost), the 10 year treasury was around 3.25%. But MBS wasn't yielding much more back then, whereas spreads for even prime conforming mortgages are sgnificantly higher today due to all the mess in the mortgage markets. So I think that unless the mortgage markets heal or the long treasury drops a lot further, you may not see a 30 year fixed at 5% without points.
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