Whats NEW in Mortgages Today

The Federal Reserve lowered interest rates today for the third straight meeting of the FOMC. What does this mean? Well, if you're looking to capture the best home loan rates, you need to act now. For those with an application already in process, you should probably lock your rate as soon as possible. And, for anyone who has yet to begin a loan application, what are you waiting for?

Rate Hikes on the Horizon
Despite this latest cut from the Fed, rates for many borrowers could actually increase soon. Why? Because Fannie Mae and Freddie Mac have recently announced 2008 Loan Level Price Adjustments (LLPAs) that are already starting to show up on lenders' rate sheets. LLPAs are automatic “penalties” based on credit scores, which tack on costs in the form of points or higher rates for most anyone with a FICO less than 720. Call me, and I will give you all the details.

Back to The Fed
But, let's get back to the good news. The Fed cut the Federal Funds Rate, an overnight lending rate that banks charge each other and which influences the amount of interest consumers pay for various types of debt, such as credit cards, home equity lines of credit, and auto loans.

Since September 18th, the Federal Funds Rate has gone down 100 basis points. If you have a loan that is tied to the Prime Rate, this means your rates have been lowered a full point. But, for those seeking to obtain new financing, you must act now to take advantage.

No Time to Wait
Following each of the last two interest rate cuts by the Fed, home loan rates jumped higher a couple of weeks later. Remember, lower short-term rates are inflationary by nature, and cause consumers to spend more money. Because of this, long-term rates tend to increase as bond holders hate inflation and command higher rates as a result in order to protect their investments.

Because of these pressures and the upcoming Loan Level Price Adjustments, interest rates are going to rise. You need to call me now in order to secure the best deal you may see for some time. You'll be glad that you did.

We appreciate your business and wish you a happy and healthy holiday season!