History shows that mortgage bond prices deteriorated after each Fed rate cut. This means that mortgage rates rose after the Fed had cut rates while many consumers were expecting their mortgage rates to decline. Prime rate will most likely decline after the Fed rate cut that is the index for may home equity lines. Worse yet are the consumers who missed the opportunity to obtain a lower rate because they mistakenly waited for the anticipated Fed action to cut short-term rates, thinking that longer-term mortgage rates would decline as a result.
So if the Federal Reserve cut rates again. Many mortgage applicants are calling their mortgage representative and expecting a lower interest rate. Others who have been waiting to refinance are puzzled.
Rates are important. Loan types and availability are much more constricted today. Navigation through this maket requires significant experience and current knowledge.
The approach or strategy in acquiring real estate has always been a much greater factor than interest rates. Favorable rates do assist with reduction in payments but are not the leading factor in real estate trends.
The current events cut long and very deep.
Roger Herrick
California Mortgage Broker
http://www.ContactHerrick.com
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Roger,
You are so right. People don't get that the interest rates are tied to bond rates and that what they think directly correlates does not.
Take care!
RJH