The FOMC slashed the Funds Rate by 0.5% to 1.5%. This is an "emergency" cut and coordinated globally.
If you’re a long time Mortgage Porter subscriber, then you all ready know that the Funds Rate does not directly change mortgage interest rates. However Fed rate cuts do influence mortgage interest rates, depending on how traders react to the cut. Remember, mortgage interest rates are based on mortgage backed securities (bonds) and bonds tend to react negatively to inflation. Often times, mortgage interest rates will increase after the Fed cuts rates as it’s viewed as a move against inflation.
This rate cut is different in that it was done global effort which should hopefully keep our currencies, oil and inflation in check. The markets remain very volatile. It’s not even 8:30 am and we’ve all ready seen the DOW open down then pop up 150 and back down to a loss of 150.
The FOMC’s next scheduled meeting (where another rate adjustment is possible) is October 29, 2008.
If you’re interested in seeing the rates I’m quoting live, click here. Presently, mortgage rates are pretty much unchanged by these events.
If you’re waiting to refinance your property in Washington State, I invite you to complete my on-line loan application so that we can be ready to lock should rates dip to point where it make sense. Rates move quite quickly in this market!