Fed Cuts rarely equate to lower homeowner Interest Rates
October 24th, 2007 . by Mike KellyThe “Fed” rate has little to do with home purchase loans. When the “Fed” rate was at 1% for a year back in ‘03 the home loan rates ranged between 5.20 to 6.25%. The “Fed” rate will effec tthe HELOC (Home Equity Line of Credit) home loans. They say the “consumer” side will get lower rates when the “Fed” cuts but I think credit cards don’t HAVE any supervision and run amok as they wish!
Here in the Bay Area of Northern California a loan ad is now running on the local radio stations with totally misleading information. The owner of the company breathlessly states the “Fed” has “opened up the flood gates” to new low rates! He talks about getting the “rate of a lifetime”! It’s this hyperbole which got the consumer in hotwater to begin with! He talks of good credit and bad credit in the same voice, boasting he’ll even pay for the appraisal of your property. Bait and switch either way you cut it!! There is NO free lunch. No fees equal higher rates, bad credit will get a woefully bad interest rate. Don’t be duped.
The “bond” market is realy the indicator of where the interest rates are heading. When we have unsure economic data or a national/world wide crisis, money floods into the “bond” market which rallies and hence “dives-down” the 30 year long term home loan. Also, keep your eye on the 10 year treasurey note. This is a bellweather as to where rates are heading. For a great columnist on the subject of credit information and loan fluctuations, check out Lou Barnes. You can google him. Read his “credit news”. He has a very savvy insight into the daily workings of the credit business. His column comes out every Friday. Quit watching the FED!
