What was looking like a ho-hum week has turned into a block buster. While our markets took Monday off to celebrate Martin Luther King Jr's birthday, the European and Asian markets tanked in fear of a US/Worldwide recession. In reaction to that, our Fed cut the Prime rate by .75% in fear of a major Wall Street sell off. Well, we still saw a major sell off, in part because of what happened overseas, and probably in part due to the unexpected move by the Fed. Wall Street doesn't like surprises.
Today started out with more of the same, but stocks are starting to bounce back.
So, what does this have to do with mortgage rates? Two things.
1) While a Bear market is bad for stocks, it is great for bonds. Long term mortgage rates are essentially bonds and when investors pulled money out of stocks they had to put it somewhere, and one of the places was long term mortgage backed securities. We are at or below 5% now on a 30 year fixed rate loan!! This is good for those who can qualify.
2) The Fed reducing the Prime Rate lowers the interest rate on most Home Equity Loans. So watch your next statement, you should see a nice reduction in the rate that you are paying. This is money in your pocket.
My Advice: The pendulum always swings back. We've seen a major swing away from stocks to bonds, and it's just a matter of time for it to swing back. Bond traders will at some point take some of the money off the table to make a profit. We have a window of opportunity here to lock in to a great rate. If you are paying more then 6% you should really be looking at refinancing, especially if you have an ARM over 5%.
Call me at 1+888-660-2842 or email me at mailto:larry.morris@equipoint.comt to discuss your situation.
Larry Morris is a Certified Mortgage Planning Specialist and Certified Mortgage Coach with Golf Savings Bank in Beaverton, Oregon. He specializes in USDA Guaranteed Rural Home Loans, FHA Purchase and Refinance, FHA 203k Rehab loans, FannieMae HomePath loans and conforming purchase and refinances in the states of Oregon, Washington, Idaho and California.
He can be reached at 503-421-0096, or larry@PDX-Mortgage.com.
Thanks Chris. I appreciate it.
Chuck - Rates are amazing right now. It's much harder to get somone in a loan, but for those ewho qualify it's great.