How will the new lower prime rate effect (new) fixed rate mortgages? Will mortgage rates drop?
2007-09-18 08:11:58 · 9 answers · asked by Chaia N 1 in Business & Finance ➔ Renting & Real Estate
the mortgage rates have already dropped....they're at 6% par with 1originatoin fee
also the 2nd mortgage rates will go down as well as the credit cards, car loans, student loans, etc
2007-09-18 08:19:05 · answer #1 · answered by Anonymous · 0⤊ 1⤋
I assume you are talking about the market rates for new mortgages. A change of the prime rate does not have a direct affect on the current rate of mortgages. The prime rate ties in more closely to the short term bond market, which is much more volitile than the long term market. Mortgage rates are tied closer to the long term bond market, but there are other factors at work also, such as the current inflation rate (which helps our rates right now because it has been low), competition from lenders (who are being more careful with the increase in defaulted loans), and the stock market (although also indirectly).
Any change that was going to occur due to the lowering of the rate had already happened as the rate change was anticipated and the market had already adjusted for it. If it was expected to change and then it didn't, then you might have seen some bond market changes, but the mortgage rates always take days, even weeks, to "catch up" to the changes in the bond markets.
If you had locked in a rate already, it wouldn't matter anyway. If you were waiting to lock in a rate, hoping they may go down, then you might get a small downward bump in the next week or so, but then again, the market may have accounted for the change already (like I said above) and the lowest rates may already be out there.
2007-09-18 09:33:28 · answer #2 · answered by TOMMYBOY 3 · 0⤊ 0⤋
No, mortgage rates are simply whatever rate a bank chooses to offer. For the most part the rate cut will help banks make more money on their mortgage portfolio, and will help businesses who have loans that are tied to the prime rate (which most are).
The rate cut CAN help consumers since credit card companies will pass on the rate decrease to their most credit-worthy borrowers. If you have bad credit then I'm guessing your rate will not budge.
I know from past experience though, that mortgage rates will not be affected by this.
2007-09-18 08:21:23 · answer #3 · answered by dkarlsenyh 3 · 0⤊ 0⤋
A variable rate is NEVER the better choice. You have no idea how high it could get or how long it will stay that high. Variable rate loans are one of the reasons so many people are losing their houses right now. It seems great at first when the rate is lower, but sometimes it gets so high that people just can't pay it anymore. Very bad idea.
2016-05-17 22:00:53 · answer #4 · answered by ? 3 · 0⤊ 0⤋
You have a contract for a fixed rate for x amount for 30 years, no that does not change if the Fed rate goes down.
2007-09-18 12:59:25 · answer #5 · answered by Pengy 7 · 0⤊ 0⤋
If you have not closed(purchased) yet, you might be able to get a lower rate. If you have closed, you are locked. Maybe in the future you could refinance to a lower rate, if they go down significantly.
2007-09-18 08:15:51 · answer #6 · answered by hottotrot1_usa 7 · 0⤊ 0⤋
No!! Fixed means fixed. Cannot be changed. Get the best possible fixed rate you can and stay with it.
2007-09-18 08:16:34 · answer #7 · answered by Tex S 5 · 0⤊ 0⤋
confusing task. research from search engines like google. just that could help!
2014-11-05 20:13:31 · answer #8 · answered by Anonymous · 0⤊ 0⤋
No
2007-09-18 08:14:43 · answer #9 · answered by Anonymous · 1⤊ 1⤋