How does the 3/4 point cut by the fed affect refinancing a mortgage? is is better to do so now than it was b4?

Question by Cruise Guy: How does the 3/4 point cut by the fed affect refinancing a mortgage? is is better to do so now than it was b4?

Best answer:

Answer by redwine
yes, rates will come down. Arm type products will be the biggest beficiary, although fixed rate mortgages will also go down. the question is are banks going to be more lax with their credit standards. that’s not guaranteed by any account. tba.

What do you think? Answer below!

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7 Responses to How does the 3/4 point cut by the fed affect refinancing a mortgage? is is better to do so now than it was b4?

  1. fastcarceo25 says:

    Of course. But restirctions are stringent AND although refinancing is a fine idea, it can result in you spending any capital which you get back. If you do it, use the money appropriately.

  2. Johnny A says:


  3. says:

    That’s the rate that banks use in lending to each other. It does trickle down to mortgage interest rates, and can have a benefit to you. The ARMS have lowest rates, but in this market, I’d go for a fixed rate loan as the ARMS are what caused all the problems right now. With an ARM, your payment could go up or down, with a fixed rate, you know exactly what you need to pay for the life of the loan. No surprises. Yes, it’s better now, but by fractions of of a point, and it may be better yet next week. BUT if you wait too long, the rates will start going back up.

  4. Small Biz says:

    Already down to 5.375 with NO doc, lender fees, or points! but WAIT … I think we’ll hit below FIVE in the next few weeks.

  5. financing_loans says:

    Arms are usually fixed to the LIBOR. London Interbank Offering Rate. What the feds did dont affect arms. Ive never seen one attacked to the Fed Rate. Its what happens in London.

    Mortgages are sold on an open market like corn. Thats the reason Mortgages companies use the Libor over the Fed Index. Its much more stable then what the Fed does. In theory rates will come down. But 4 years or 5 years ago when Feds were dropping the rates. Mortgage rates went up 2% when the feds dropped the rates 3%.

    Mortgage rates went down yesterday before the fed made their decision. It was because of the chinese market. People were pulling their money out of stocks and putting them into bonds. When the stock market recovers rates will slowing start to go back up.

    Good Luck

  6. crapaudblanc says:

    Different mortgage rates at peg agaisnt different rates. Lowering the prime rate means that all those people that have ARM peg to the 1 yr Treasury will see their rate go down. Some longer ARM are tied to the LIBOR which has been going down for some time. Fixed rates are usually pegged to the 10 year treasury and the spread between the 10 yr and the Prime rate. Mortgage rates have been going down for some time now (last 2/3 months) but due to higher credit standard and decreasing housing prices people have not be able to take advantage of these lower rates. Lowering the prime rate will help credit card debt, car loan and short term ARM. All other loans are tied to other rates. In any case refinancing now or later is a function of your capability to refinance (higher credit standard and size of loan vs house price) than actual rates since they have already been decreasing for several weeks. Talk to your broker or bank and find out 1) what is your rate tied to (Prime, Libor, 10 yr treasury…) 2) you ability to refi as having good credit or looking at the loan amount versus your house comps.

    good luck

  7. suzieq1007 says:

    I would say refi now, if you are planning on staying in your home for at least 3-5 yrs, you might as well refi into a low rate. Ofcourse good credit will be needed as the lenders are not lending to the subprime customers (dinged credit).

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