I never honestly thought the rate cut would make a big difference in lending or for the rates charged to our buyers. Well maybe it does on the lending side because they can now make more money offering the same rates or, charge more in fact. The new rate is what the rates had been trading at before the RATE CUT announcement. The bottom line is that rates actually went up http://money.cnn.com/2007/09/20/real_estate/mortgage_rates/index.htm?postversion=2007092010. So what good did the rate cut actually do? In my opinion I believe that buyers will realize that now is a good time to buy. And as REALTORS we can make our clients understand that these rates will not last forever, and, home prices will not decline forever either. I believe that this is still good news, and my lender buddy tells me, (who by the way, predicted the rate cut about two weeks before the fed cut the rate) that the Feds could actually cut the rates a little more if the economy continues a downward spiral. I don't hope the economy continues to struggle but I do hope that rates get cut again so that more buyers realize that American dream, in owning their own home and help to get rid of the large inventor of homes. If not this industry will continue to be stagnant and suffer the consequences of past years and the equalization of home prices where they are overvalued. This is just my opinion and I accept anyone else's opinions, so feel free to let me know what you think.
Hi Ulises... I'm enthusiastic to say the least about the rate cut. I haven't seen a HUGE jump in action on the market, but I do believe it's a positive move in preparation for the winter market which is typically slower.
Hey I love the listing slideshow on the right. Can you email me and tell me how to get that into my blog window?
Ulises, those of us who follow the market daily new that the rate cut was coming. There was 100% concensus that the Feds would cut the rate by 1/4percent. Some put the cut at 1/2 percent. Such a dramatic cut on the first go round, leads us to believe that the economy is in worse shape than we are aware of.
I want to explain what affects mortgage rates: Mortgage rates are affected by Mortgage Backed Securities. Some people track the 10yr Treasury which alot of times trends the same, but it is the WRONG indice to be looking at. When the Federal Reserve cuts the Fed Funds Rate, what is affected in the home loan arena are HELOCS since they are tied to the Prime rate. Typically rate cuts have the opposite effect on home loan rates: rates rise! Interestingly, after the announcement, rates IMPROVED and caused a bit of head scratching. This was short lived however, as the gains were given back today in the form of rates being back to where they were on Monday and Tuesday.
We are anticipating additional cuts the rest of the year, which could mean a worsening in home loan rates. If you have clients that are sitting on the fence I agree that you need to educate them that now IS the time to buy. Rates are still good, and lenders are starting to slooooowwwlllyyyy add back some of their programs, but loans ARE still available.
Have a great weekend!
Michael: I think we have the right to feel enthusiastic. If we are pessimistic we will pass this along to our clients and we do not need to add to their feelings about our market.
Micki: I am glad there are educated and knowledgeable people like you and my buddy, who keep us informed about the state of Rates and other markets that affect our industry.
Thanks for you posts.
Micki, you mortgage people like it both ways. When the fed raises the raes yours goes right up along with them and you say thats the market. When the feds cut the rates you say you don't follow that market.
Its kind of like the oil companies. As soon as the price of oil goes up, so does the gas in the ground. When the price takes a dive, it takes a few days for the price of gas to go down. Its called profit taking.
Nothing wrong with it but call it what it is.
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