Here is the weekly mortgage interest rate comments from Mickey:
Mortgage interest rates have drifted slightly lower over the last few days. Buyers seeking 30 year fixed rate mortgages can expect to find rates ranging from 6.375% to 6.875% without paying discount points or origination fees. Actual rates for individual borrowers will depend upon loan size and creditworthiness of the borrower.
Last week one of my loan applicants asked, in a gleeful voice, how much the interest rates dropped after the Federal Reserve "lowered them". I had to explain that long-term rates actually went up slightly the next day although they have fallen somewhat in the intervening two weeks. My borrower was not thrilled with the news. No doubt your buyers have also expressed the belief that the Fed "lowered rates".
Be aware that the Federal Reserve has the ability to set short-term rates ONLY. The actual rates the Fed controls directly are the overnight rates used by banks to borrow from each other (Fed Funds rate) or directly from the Fed (discount rate). Banks use the overnight market to meet their reserve requirements, as set by the Fed. By moving these two short-term rates the Fed can influence long-term rates, but the market, that is, the trading participants, actually determine such rates. Sometimes market participants cause rates to move in strange ways (to us!) due to concerns over inflation or other economic conditions. My message is that professionals should consult with their lenders before discussing the level of rates with clients. The six o'clock news is not always what it seems.
Last week one of my loan applicants asked, in a gleeful voice, how much the interest rates dropped after the Federal Reserve "lowered them". I had to explain that long-term rates actually went up slightly the next day although they have fallen somewhat in the intervening two weeks. My borrower was not thrilled with the news. No doubt your buyers have also expressed the belief that the Fed "lowered rates".
Be aware that the Federal Reserve has the ability to set short-term rates ONLY. The actual rates the Fed controls directly are the overnight rates used by banks to borrow from each other (Fed Funds rate) or directly from the Fed (discount rate). Banks use the overnight market to meet their reserve requirements, as set by the Fed. By moving these two short-term rates the Fed can influence long-term rates, but the market, that is, the trading participants, actually determine such rates. Sometimes market participants cause rates to move in strange ways (to us!) due to concerns over inflation or other economic conditions. My message is that professionals should consult with their lenders before discussing the level of rates with clients. The six o'clock news is not always what it seems.
