In case you missed it, there was big news that that the Feds dropped the Prime rate (2 times) in late January.  This was portrayed in the news as a powerful force to lower all mortgage rates.  The truth is that the rates had improved greatly in the three weeks before the drop in Prime in anticipation of it.  After the event of the Prime rate reduction, rates quickly rose back to where they were in December (6.25%).  If you find this a bit confusing, you are not alone.  The connection between the Prime rate and 30 year mortgage rates is not as strong as some media portrays it.  (I actually sent a newsletter in mid January declaring the time to refinance.  In hindsight I was right in the time to refinance but I had no idea that those rates would be good for only about a week.) 

•·         The Prime rate sets the bar on short term lending.  On a consumer level we are talking about Home Equity Lines of Credit, Credit Cars, Etc... 

•·         Typical 30 year Mortgage rates are influenced by the yield on long term Bonds.  And, the greatest influence on the Bond market is the perception of the future of our economy. 

Predicting movements within the Bond market is extremely complicated - and I admit I don't pretend to understand it.   My point is that a reduction in the Prime rate does not translate into a drop in the 30 year rates.  My advice is when (if) 30 year rates drop back into the 5.75% area - you should jump on it.

 Jim Cunningham

Community First Financial, LLC

7575 E Redfield Rd   Suite 235

Scottsdale, AZ  85260

480-305-8900 ext 305 - office

480-907-2435 - fax

602-434-8261 - cell

jcunningham@communityfirstfinancial.com

http://www.communityfirstfinancial.com/

http://www.jimcunninghamcff.blogspot.com/

http://activerain.com/jcunningham