Re: Emeregency FED Rate Cut This week

Hi readers, this is Robin Ronald (recently reinstated my license) sharing a bit of current info with you. The following is from email sent to our Frederick Sales Office by our in-house lender, Prosperity Mortgage, January 23, 2008. This is her opinion and should not be considered in ANY other context by readers of this blog. She told me that she broke her crystal ball many years ago!

Emergency FED Rate Cut
Turn on your TV. The stock market futures were pointing towards a 500 point fall in the Dow Jones today as a result of a global stock sell off and the FED reacted before the markets opened and implemented a .75% cut to the Fed Funds rate. This rate cut is designed to protect the economy and to stabilize the markets here in the U.S., however REMEMBER that this does not mean that 30yr Fixed Mortgage Rates will be dropping for sure. We may see a slight improvement, however this can cause mortgage rates to worsen as a result of the markets seeing the FED is going to do what it takes to stabilize the markets. When the stock market is stimulated by FED events like this, the Bond market can suffer. When the bond market suffers, mortgage rates worsen.

This will immediately help the consumer who has a Home Equity Line of Credit secured to their home and is floating via the Prime Rate. They will see those rates drop in their next monthly statement cycle.

Please don't hesitate to call me directly for any of your questions or concerns. Keep in mind that 30 year fixed mortgages are at all time lows! If you are considering refinancing or purchasing, wait no longer! Just as quick as rates have dropped over the past few months, they can jump right back up. Now is the time to take advantage of a rate in the low 5% range!

Hi there, Robin again. What I do know is I personally did a refi this week for a very nice 30 YR fixed rate (from my 5 YR ARM based on Treasury). Now seems to be an ideal time to refi and hopefully, things will get better across the board - sooner than later.

Keep positive out there!

Robin Ronald January 24, 2008