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CategoriesSelling Real EstateBuying Real Estate Market and Trends Homeownership Home Finance Acts of Agents RE Manners Staging The Examined LIfe Credit Ready Favorite LinksIncredible Agents.comArchivesJanuary 2008Federal Rate CutsPosted at 11:48 AM, Jan. 31, 2008
Here is some insight from our in-house mortgage expert Ben Bibat regarding the recent Fed cuts and how that translates to you, the consumer.
Historic Fed Move Cuts Both Ways for Borrowers
Hot on the heels of its surprise inter-session rate cut of 75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007. In its statement last week, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth." In other words, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.
Who benefits from this cut?
If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.
What does this mean for long-term rates?
Long-term mortgage rates, the lowest we've experienced in years, could actually increase after today's cut, based on historical performance and recent trends.
So if you're waiting for long-term rates to fall further, don't count on it. Your best chance to lock in the lowest rates since 2005 is now. Getting your application in process now will allow you to capture a great rate before it's too late.
What REALLY moves mortgage rates?
Fixed-rate mortgage rates aren't directly tied to Fed interest rate moves. Instead, they tend to follow in the direction of other long-term government bond yields, such as the 10-year Treasury, which historically moves in accordance with the economic outlook and in advance of Fed actions. The performance of Mortgage Backed Securities, issued by Fannie Mae and Freddie Mac, is what really determines long-term mortgage rates.
How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates.
On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in 20 high-cost areas across the country.
What should you do next?
If you're unsure how the rate-cut or the proposed legislation affects your mortgage, don't worry, you're not alone. There's no one-size-fits-all answer. Give us a call right away. We'll review your mortgage and see what, if anything, can or should be done to make the most of your individual financial goals and needs.
Benjamin Bibat
Vice President PHH Home Loans 1457 W. Belmont Ave. Chicago, IL. 60657
Direct/Fax 312-635-4111
Cell 773-750-2095 email: ben.bibat@phhonline.com website: ben.bibat.phhchicago.com Chicago Market UpdatePosted at 8:14 AM, Jan. 23, 2008Well we may be starting off a bit slower than in the past, but the forecast is looking promising for many experts. Here is this week's data supplied from the Chicago Association of Realtors of how many homes have entered the market the period of January 10th through the 16th in 2008 in relationship to previous years.
Here are the homes that have left the market during this period.
This indicates that we have on average an 8 month supply of homes. Note that this information reflects the area as a whole and is not representational of the individual neighborhoods and subneighborhoods of Chicago. { 0 comments } { add comment } { Permanent Link }
View more entries tagged with: Market Update, Inventory, Housing Stats I am On TV!Posted at 1:23 PM, Jan. 22, 2008All right you'all, I am letting you know about my offical television debut on the hit show "MY HOUSE IS WORTH WHAT?" onHGTV. It airs tonight. This is in fact, my very first episode. Since then I have completed 3 other episodes to be aired in the coming year. So, if you'd like to see me in action, or at least get a good chuckle, tune in. I will blog about the experience after it airs.{ 3 comments } { add comment } { Permanent Link }
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