How the Federal Reserve cutting rates affects your Dayton Ohio Mortgage Rate?

This past month the Federal Reserve has cut rates by 1.25%. Most people think this means that now is a great time to refinance your Dayton Ohio Mortgage or invest in Dayton Ohio Real Estate.

Dayton Ohio Mortgage Rates hit 3 year low:

Unfortunately the federal funds rate does not directly affect the 30 year fixed rate mortgage on your Dayton Ohio home. Although changes in it, especially unexpected ones, can impact Dayton Ohio Mortgage rates temporarily. For example when the Fed made an emergency .75% rate cut the Dayton Ohio mortgage rates hit a 3 year low... for about 6 hours.

Dayton Ohio Mortgage Rates vs. Fed Funds Rate:

The federal funds rate is actually the overnight lending rate. Sounds simple right? Many people automatically think that if the Fed drops the rate than Dayton Ohio Mortgage Rates are dropping. WRONG! The Fed fund rate influences short term rates and I am not talking about adjustable rate mortgages (5 and 7 year arms). The fed funds rate affects certain types of Dayton Ohio Mortgages such as home equity loans, credit cards and other short term loans like car and persornal loans. It can also effect CD's, savings account rates and money market accounts but will not have a direct affect on Dayton Ohio mortgage rates.

The 10 year bond and Dayton Ohio Mortgages:

Dayton Ohio Mortgage Rates follow the US treasury bond rate, particularly the 10 year bond. Dayton Ohio Mortgages track US Treasury bonds quite well. There is no direct relationship but if you compare the two side by side you will see a correlation. See the cart below from HSH.com.

For the most part you can count on a few things:

1. Dayton Ohio Mortgage Rates tend to follow the 10 year Treasury Bond.
2. Unless the Federal Reserve does something un-expected your Dayton Ohio Mortgage rates will not be affected.
3. If inflation is anticipated by anyone with some credibility Dayton Ohio Mortgage Rates will rise.
4. So if you are counting on a FED rate cut to save you from foreclosure, it won't help... a Short Sale may be what you need. Read Short sale steps: how to avoid foreclosure.

If you want to know more about the Dayton Ohio Real Estate market you can read about it at: Dayton Ohio Real Estate Market Update: Total Market Overview . Some other things that you can look for when it comes to the Dayton Ohio Mortgage Rates are first time home buyers loans and some HUD incentives especially for Ohio Home buyers.