Why aren’t mortgage rates going down despite the Fed rate cut?

tardis_mom asked:


We would like to refinance our current mortgage and I was hopeful that the result of the Fed rate cut would be a drop in the mortgage rates. However, it seems like mortgage rates only dropped by about 1/4 % point (I was hoping to go down to about 5% on a 30 year fixed rate with no points with an excellent credit score). What determines whether mortgage rates fall and how much?

Jennifer

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5 Responses to “Why aren’t mortgage rates going down despite the Fed rate cut?”

1. glenn Says:
   May 28th, 2009 at 7:09 pm

   Brandon

   Fed rates are only very short term loans from one bank to another.
   30 year mortgages are loaned based on long term data. What does the investor believe the inflation rate will be over the next 7 to 10 years (the life of most loans before they are paid off).

   If the fed rate cut leads lenders to believe the inflation rate will be low then they will lend at lower rates. They use long term bonds and other data to guess at this.

2. frontstca Says:
   May 29th, 2009 at 2:52 pm

   Jamie

   The banks want to recoup money that they lost lending to the deadbeats that usually didn’t qualify
   They were approved by unscrupulous mortgage brokers to get fast fees and this has brought on all the foreclosures so they are screwed and so are we…

3. chatsplas@sbcglobal.net Says:
   June 1st, 2009 at 11:59 pm

   Alicia

   They are, but more slowly. The Fed cut is on the rate banks charge each other, and it trickles down eventually.

4. healthspot_2000 Says:
   June 2nd, 2009 at 6:12 am

   Clifford

   the bonds determine with whether or not the rates fall. The rates dropped on consumer loans, auto loans, and helocs, it does not affect first mortrgage rates directly. It will though in about 6-12 months. Sometimes they even go up.

5. Luck Y Says:
   June 2nd, 2009 at 7:51 pm

   Jack

   The 30 year fixed rates are possible at this time. It is best to go with a mortage broker that can submit to the banks that are making the federal rate decrease immediately available to consumers. Not all banks are offering the rate drops becasue they still seek to make the big bucks, but a mortgage broker can circumvent that and find what you are looking for. I have approved rates as low as 4.75% on refinancing. Email me is you have any further questions.