Question by Kavan Lee: What does the Fed’s three-quarter point cut today mean for mortgage refinances?
I got a jumbo loan in October 2007 at 6.125% (I’m in the SF Bay Area). Since the Fed rate has been cute by 2 points since then, and I understand that as of June my loan will become a conforming loan, what kind of refinancing rate could I reasonably expect to obtain this summer? By “reasonable,” I mean nothing shady, just run of the mill Bank of America or Wells Fargo type solid deals.
Answer by J O
Honestly there is no way to know. I manage at the national headquarters of Midwest’s largest privately held mortgage bank and we have no idea what is going to happen with rates. While you are correct that you will soon have a conforming loan, we are anticipating a tiered rate structure amongst the major end investors. I would not be surprised to see a new subset of rates that falls between conforming and jumbo. 6.125% is not a horrible rate in this market for a fixed, jumbo product.
If you have further questions feel free to email me, unlike most people who answer questions on here I actually know what I’m talking about and have the credentials to back it up.
Edit: I just recieved this email from an answerer that I will not name
“unlike most people who answer questions on here I actually know what I’m talking about and have the credentials to back it up.”
Granted there are a bunch of idiots and kids but pardon me for stepping on your holy feet YOU ain’t the only one with credentials that far out weight yours.
It’s ok to disagree with me, but if you are going to do so please at least use proper english! Ain’t and out weight…HA!
Know better? Leave your own answer in the comments!
Each lending institution seems to be doing their own thing within limits. There is no way for anyone to predicts what each company is likely to do.
The fed’s have cut rates alot lately but the banks/lenders are hedging their bets that they can make up their losses with not giving better rates to consumers. This is not what the Fed wanted to see.
It takes awhile for these rate cuts to filter down as well, so just hang on. We’re all praying for rain sort of speak!
You probably won’t see much of a change.
The Fed’s 3/4 point rate was on overnight loans from the Federal Reserve Bank to the local banks.
The local banks can still charge whatever they can get away with.
The question you will need to know before trying to get any refinance is what is your house worth now. You may discover, as many others who are trying to take advantage of the dropping interest rates, that your house will be deemed less valuable then when you got your loan back in ’07. If you don’t have at least 20% equity you’ll find it extremely difficult to get a new loan no matter what the rate will be.