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ATTENTION LENDERS HOW LOW WILL THE FED GO THIS TIME?

I'm hearing all over the radio right now here in suburban D.C.

The general consensus is that there's going to be a half point drop on December 11th, and some Industry insiders here in Washington are claiming that a full 1% between now and the end of January would not be out of this world.

I know that doesn't dictate mortgage loan rates directly, but it can and will influence them and I know a few lenders who are already anticipating the drop.

I'd like to hear some opinions, particularly from lenders who are better versed in this subject than myself. What are you guys anticipating, and how is it going to affect your current clients and deals? Would a 1% drop in the reserve rate really surprise you right now? Most importantly, do you think that a drop of that nature would be able to help sooth our industry, particularly the builders?

Jonathan Benya

Century 21 New Millennium

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Posted by Southern Maryland Real Estate~ Jonathan Benya on 12/04/2007 12:17 AM

Comments (7)

federal reserve rate, loans, interes rates, maryland, md

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7 Comments on *ATTENTION LENDERS* HOW LOW WILL THE FED GO THIS TIME?

It might just be the psychological push to get buyers to make offers

12/04/2007 12:26 AM

by Brett Noel, California's Success Coach Author / Motivational Speaker / Broker (Creating Millionaires one agent at a time)

Hi Jonathan: Actually, I would be very surprised at a total drop of one full percent between the next FOMC meeting, and then at the one in January. I can anticipate a pretty good debate if that happens. Some will think that is overdoing it, and at first I might have agreed. But, the more I think of it... not only the real estate market, but the entire economy seems to really be in need of some monetary stimulation.

12/04/2007 12:26 AM

by Fort Worth Real Estate - - - Karen Anne Stone (RE/MAX Trinity)

Karen- I've been thinking much along the same lines. I still think that 1% may be too extreme, but the more I mull it over the less surprised I will be if it happens. The overall economy is very soft, and I think the big fear lies in the possibility of a recession right now.

12/04/2007 01:51 AM

by Southern Maryland Real Estate~ Jonathan Benya (Century 21 New Millennium)

Jonathan - I'm curious how this may affect jumbo pricing.

12/04/2007 07:48 PM

by Craig W. Barrett - Hughesville MD Real Estate (RE/MAX 100)

A drop in the overnight rate would actually cause rates to rise on 30 yr fixed loans.

12/04/2007 07:56 PM

by Scott Blanchard (Mortgage Force LLC)

Lenders have already priced in whether or not the Fed with make a change. It's not going to affect the pricing of mortgage loans, but will affect Home Equity Lines of Credit and auto loans.

12/06/2007 10:38 AM

by Sean Tucker

Scott and Sean- you both have very different answers! I was trying to get a sense of where people felt the fed rate was going, not mortgage rates. As I said, I'm aware that the Fed rate does not affect directly consumer mortgage rates. I does however affect our deals and clients with fund diversification and either make them more willing or more hesitant to buy. That was what I was trying to get at(I know I wasn't clear, I apologize for that), because the risk (inflation) of lower rates seems to be getting higher and higher as the rate drops.

12/06/2007 03:59 PM

by Southern Maryland Real Estate~ Jonathan Benya (Century 21 New Millennium)

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