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Federal Reserve Cuts Expected Again this Week

Posted by: Lisa Nichols | Mar 17,2008

The Federal Reserve is expected to cut mortgage rates by a half percent tomorrow, say news reports. This comes on the heels of a weekend drop of a quarter point in an emergency lending rate to financial institutions. The emergency lending rate decrease is meant to provide financial institutions with “greater assurance of access to funds,” according to Federal Reserve Chairman Ben Bernanke.  

 

Mortgage Interest Rates still on the Rise

 

Even though the Federal Reserve has made interest rate cuts, interest rates for 30-year fixed-rate mortgage loans have increased. 30-year fixed-rate mortgage loans rose .10% last week to 6.13% from 6.03% two weeks ago, says mortgage lender Freddie Mac. (Owers, Paul. “Despite Fed cuts, mortgage interest rates creeping up.” South Florida Sun-Sentinel Mar. 2008.)

 

Homeowners Look to Refinance Mortgage Loans

 

Though a number of homeowners would like to refinance their mortgage loans, experts recommend exercising caution. Applications for mortgage refinance loans jumped by more than 130% from November 2007 through January 2008, reports the Mortgage Bankers Association. But experts warn against being overeager to refinance mortgage loans. Homeowners who don’t have a mortgage interest rate above 6%, have a credit score below the national average (692, according to Experian Information Solutions, Inc.) or who don’t have enough equity in their home (varies by location), should wait to refinance. Waiting gives the homeowner time to get more equity in their home and to improve a credit score, both of which will affect their ability to get the best mortgage loan rates.

 

Some Will Benefit from the Federal Reserve Cuts

 

A number of homeowners will benefit from the Federal Reserve cuts tomorrow. Homeowners who have home equity lines of credit, homeowners who have an adjustable rate mortgage (ARM) or want to refinance their ARM into a more traditional fixed-rate mortgage and homeowners with a reverse mortgage will all see benefits from the Federal Reserve cuts. 

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