In the minutes, hours and days after a rate cut, the phone calls come fast & furious. What does this mean for mortgage rates? Should I refinance? What is the rate now? Should I refinance? How come mortgage rates did not come down yet? Should I refinance now?
Before I continue, pls note that I have been in the mortgage business for 22 years. I am not an economist and I don't have a crystal ball. What I can say is that if history repeats itself, mortgage rates will be jumpy for a few days before they settle down and slowly slide downward. I believe this to be the case because there is genuine talk of recession, and almost no mention of inflation. Rate cuts in nature, are used to spark the economy. Therefore, lowering rates could be seen as "inflationary" and bad for future long term rates. Today, I don't think this will happen. I believe that this cut was a simple act of stemming the combo tide of a slumping world stock market, US Housing woes and market psychology in general. So, where are rates going? I think down.
Is this a good thing? You better believe it. Once the prime rate drops,(usually same time as the fed funds) you'll see Lower credit card rates, lower car loan rates, lower home equity rates and eventually lower long term fixed rate mortgage rates. All these are positive in the sense that the consumer will see some relief from the dire news that permeats every tv show, every newspaper and in the minds of everyone in this business right now. The Fed may just have unlocked someones desire to take a chance on buying a home today.
Hang in there, help is coming and it's name is a 5% 30 year fixed
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