Just in time for the holidays, the FOMC surprised everyone by cutting the Fed Funds rate to a range of zero to 0.25%. This 0.75-1.00 reduction is more than the widely anticipated 0.50% rate cut. The Fed also reduced the Discount Rate by 0.75% to 0.50%.
Bernanke and the FOMC didn’t stop with the giving there…they reiterated their commitment to buying mortgage backed securities which keeps mortgage interest rates low.
“…over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant”.
You can read the entire FOMC Press Release by clicking here.
The markets reacted joyously with the DOW closing up 359 points and mortgage backed securities performing nicely as well. Loan originators did not see rates trickle down as much as they should have today…I’m anticipating that we’ll have improved mortgage rates tomorrow.
Do keep in mind that the mortgages that will be impacted are conventional (Fannie and Freddie) and not Jumbo’s…unfortunately. With these lower rates, we will be entering into a “refi boom”. This means that refinances may take longer (regardless of what your loan officer promises you) because every aspect of the industry will not only be inundated; there are fewer folks employed in this industry.
Speaking of employment, another reason to not delay your refinance is the uncertainty of jobs in this economy. I do recommend refinancing now–you can always refinance later should rates justify.
Our current rates are a gift from Santa Ben…don’t wait! Contact your local mortgage professional to see if it makes sense for you to refinance based on your personal financial scenario. Click here if I can provide you with a mortgage rate quote for your Washington home.