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The Rate Cuts Are Coming...The Rate Cuts Are Coming!!

Treasuries fell as higher-than- forecast reports on inflation and industrial production may reduce speculation the Federal Reserve will lower borrowing costs by more than a half-percentage point this month.

Yields on benchmark 10-year notes were near the lowest level in more than four years. The housing slowdown and losses on securities linked to subprime mortgages have led investors to push the yields down in the past month by the most in more than two decades on bets the economy will fall into recession.

There are even talks that the FED may come in with an inter-meeting rate cut!!

Some analysts are even talking about a THREE QUARTER OF A PERCENT RATE CUT?!!?

WOW!

The central bank hasn't eased by more than 50 basis points in a single move since Oct. 2, 1984!!

It looks like a rate cut for sure...it seems the only question now is...HOW MUCH??

I say 1/2 point.....Whats your guess?

:-)

Posted by Kris Krajecki Mortgage Broker Huntley, IL on 01/16/2008 11:49 AM

Comments (7)

rates, rate cut, mortgage, economy, refinance

7 Comments on The Rate Cuts Are Coming...The Rate Cuts Are Coming!!

JAN

2008

I would like to know when this rate cut will occur I am getting ready to take out a home loan and would rather do it after that point;)

The FED is next secheduled to meet on January 29th and 30th....allthough it will most likely be moved up to the 27th and 28th since the 29/30 is a Sat./Sun.
...and then not again until March 18th!
:-)

It is interesting. This is especially good for my first time homebuyers. Kris, thanks for watching this so closely and keeping us educated! What do you think will happen now that the inflation report has come out? Could it put a damper on the rate cut?

I am putting in my guess at a 1/2 point rate cut, even after todays news.

:-))

JAN

2008

I read a report this morning that discussed this issue. The fear is that the rate cut will help stocks but hurt mortgage rates because the bond markets will be afraid of inflationary trends.

Here is the rub...more rate cuts will continue to devalue the US dollar; 40% of mortgage backed securities are purchased by foriegn investors. At the yields that MBS's are offered at currently, why would they invest in bonds tied to a weak instrument that are offering yields lower than what they could get elsewhere.

At some point, for FNMA and FHMA to get those bundles sold, they will have to offer higher yields. If we don't experience a backlash soon after the fed cut, I'll be very surprised!

Rich, you said that so well. By a backlash, do you mean you expect mortgage rates to rise after the rate cut?

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