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Fed Rate Cut Fails to Reduce Mortgage Interest Rates

Federal Chairman Ben S. Bernanke who has historically been able to reduce interest rates faster than any Federal Rserve Chairman is having issues bringing down the cost of credit for American homeowners.

The average 30 Year Fixed Home Loan Rate rose .5+ percentage point during the past four weeks to 6.04%. Mr Bernanke is scheduled to face Congress Feb 28th and explain why long-term bond yields are moving in the opposite direction to the Fed Funds rate.

Lower Fixed rates will ultimately decrease foreclosures and increase consumer spending. More than two-thirds of American own their home, bringing the nation's total mortgage debt to $11 trillion. An estimated 1/3 of the loans are adjustable rate.

Check out Federal Reserve Fails to Cut Loans Rates

Dallas Fort Worth Real Estate

Posted by DFW Urban Realty on 02/26/2008 01:56 PM

Comments (3)

fereral reserve loan rates, federal reserve reduced interest rates, mortgage debt, adjustable rate mortgages

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3 Comments on Fed Rate Cut Fails to Reduce Mortgage Interest Rates

FEB

2008

The fed is not the one that will hold the mortgage rates low. It takes time after they move down for the mortgage rates to go with it. People in the public need to be educated about these things.

And why should we be waiting to hear his explanation? The Feds lowering the rate has nothing to do with Mortgage Rates. That only drives the short term credit card rates. The 10 year note yield drives the mortgage loans up or down.

"Bernanke and his colleagues have no direct control over mortgage rates. Fixed rates historically decline in tandem with Fed rate cuts that signal slower economic growth and a reduced threat of inflation, said Keith Shaughnessy, president of Foundation Mortgage Corp. in Littleton, Massachusetts"

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