Recent Interest Rate Cut |
The 3/4 point interest rate cut the other day was met with enthusiasm by Wall Street, as it surged to its greatest increase in a long time. Just as quickly, the next day it took back much of that increase. This is what is mean by "volatility." The Fed is still pandering to Wall Street, not Main Street. That interest rate cut means nothing as far as mortgages are concerned. We can't even say it was already discounted before it happened. There was virtually no movement in interest rates prior to or since the cut.
In fact, mortgages still are in a state of flux as lenders try to recoup losses and lessen any exposure to future ones. For the home buyer this means higher down payments in many cases. Moreover, lenders are targeting certain areas as declining markets without any indication as to criteria.
Even more shocking, VA mortgages were strangely left out of the legislation that raised "conforming limits" for FNMA and FHLMC to $730,000. That omission is being addressed right now, but it indicative of an attitude that often ignores the borrower on Main Street. VA mortgages amount to about 11,000 per year. That's a pretty big number.
Current attempts by the Federal government to keep the economy from falling off a cliff may very well be successful, but for the typical borrower these actions may not have as immediate an impact. But with 30-year mortgage rates still hovering around 6% or less, and inventories of homes high, a courageous homebuyer can do well.
