FED .50% cut today. Will this change my 30 year fixed rate at 6.75 that Ijust received yesterday on approval?
I just received my FHA backed approval yesterday for my home loan. A 30 year fixed mortgage at 6.75%. On my loan documents my rate was "floating". I'm waiting on the appraisal corrections to be completed to get the "Clear to Close" sign. My question is can my rate be adjusted to reflect the FED cut of .50% or do it really matter. I talked to my broker about it and he stated it doesn't directly affect me but it will help ARM loan borrowers more directly. Any advice would be helpful. I would love to save evry penny I can
- Anonymous1 decade agoFavorite Answer
Dwan, I am so sorry for people who give opinions with out knowledge. I have been in the mortgage business for over 30 years, and I will tell you this rate cut HAS a direct effect on lenders rates. Before auditing, I was in marketing, (buying rate commitments for banks) so my advice is to wait a day or two , and ask for the 1/2%. The L/O is WRONG, F.H.A. loans are mostly G.N.M.A. pooled, but the servicing lender needs a day or two to get the index, and margin. If you do not get this reduction the lender will? Good Luck!Source(s): Retired Mortgage Auditor
- 1 decade ago
more than likely if you are not locked into the 6.75 you can get a lower rate, however the margin is what you go by...if the fed lowered a half point the bench to the banks are a half point and its the margin to your loan that you're concerned about. THE MARGIN!
ask your bro about the margin related to the bank fee. e.g. if the bank has a 4.25% bench and you get a 2 point margin, you get a 6.25% loan. If you are locked into the 675 from your mortgage broker, you're stuck...unless you can find a way out without fines & fees, otherwise ask your mortgage bkr to get you another ln if it can be done w/o additional fees and costs.
paying 5 grand for another ln is not worth the change for a small amt unless your loan is larger than 500k and you plan to stay in the home for many many yrs to come...then it pays off in the long run.Source(s): RE investor, owner & LL
- Anonymous1 decade ago
NO. Prime rate has NOTHING to do with Mortgage Rates. Mortgage Rates are determined by the bond market. What this fed rate cut has actually done, is people have taken money out of bonds and are putting them into stocks (this is why you see all of that the stock market shot up today when the fed cut the prime rate .5%). When money is taken out of bonds and into stocks the bond market can go down, driving mortgage rates UP.
The true prime rate is at 4.75% now, which that is the rate banks lend money to other banks at. The prime rate consumers are eligible for is at 3% higher than that, at 7.75%. People may see decreased rates in consumer products such as auto loans, and home equity lines of credit for sure.
But regarding your fixed rate mortgage it will really have no impact whatsoever.Source(s): I do home loans for a living
- 1 decade ago
I saw mortgage prices improve by .25 to .45% today. That is different than the rate. It is the cost or points. So points went down and if you are floating you should be able to take advantage of a short term lock and get some improvement in your loan fees. For example if your loan is $100,000 you might expect $250 less (.25%) on the fees you are paying. For more information about mortgages, visit my 360.
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- 1 decade ago
Mortgages are only weakly linked to the fed rate.
Mortgages are more strongly correlated to T-bill rates, such as the 1-year T-sec. These go up and down depending upon how much money the govt. lends and how many people want to buy our bonds. It's determined more by China and Saudi Arabia than the fed. The reason for the strong correlation is that mortgages 'compete' with T-bills for money. Both are long-term, relatively safe places to earn some interest income.
These rates are actually going UP as a result of the fed funds change, because people are taking money out of bonds and putting them back in stocks. When bond prices go down (due to less demand), interest rates go up.
- 1 decade ago
The textbook says 10 year money determines your rate,
not the overnight money that .5 reffers to. But it is about leadership and direction. If the fed, a central, private bank wants to inflate the economy, it starts by lostening up the short term rates, but the text book says 10 years is 10 years, and that is not a one day move.
Would love to hear a dissenting oppinion.
The rate was dropped to replace fear and less money creation caused by foreclosures and a fewer loans being made.
- MikeLv 61 decade ago
No, The Fed prime rate is not really tied to 30 year fixed morgates.... treasury bonds are.... and since the overall economy is doing fairly well, we probably wont see much of a reduction in the 30 year fixed rates.
But shop around a little... I just closed on my FHA loan today @ 6.5%.
- J. W. HLv 51 decade ago
your broker is making at least a half point on your loan.... he probably got it for 6.25.. he is not about to try to save you any money.. if he can call someone and get a lower rate and still lock you in at 6.75 then that is what he is going to do.. my rate is 6.625.. that ain't bad and neither is yours.. what he told you though is not true.. it is not designed to help the ARM rates.. try this.. tell him that someone else has called and offered you a rate of 6.5.. and you are considering looking into it.. see what he says then... if you don't ask for a lower rate.. then you won't get it.. make him sweat a little bit.. and see what he does.. I guarantee you.. he is not going to do anything to lose your account.. good luck
- rapaloLv 43 years ago
The Fed does no longer administration 10 12 months observe costs. basically short term costs. The Fed reducing costs replaced into to bail out the money center banks. It had little or no to do with housing. P.S. as quickly as the Fed introduced the linked fee decrease, the dollar TANKED. P.S.S. assume to pay so plenty greater for the flaws you like daily to stay interior the destiny. coverage, nutrition, gas, clothing, etc. Terry S.
- thedavecorpLv 61 decade ago
"Fixed rate" but the loan rate is "floating"?
Which is it?
You'd better find out, and FAST!