After global financial markets took a dive Monday on fears that the world’s largest economy was headed toward recession, the Federal Reserve took swift and immediate action. In an emergency meeting, the Fed cut its overnight lending rate by 75 basis points, hoping to prevent a complete market meltdown. At opening Tuesday, stocks plunged on Wall Street, with the Dow Jones dropping 465 points at its lowest point, then regaining some ground to close just below the 12,000 level - its lowest in 16 months.
Frank Nothaft, chief economist for Freddie Mac, calls the Fed’s cut “good news for people who have mortgages or are shopping for a mortgage.” Borrowers with adjustable-rate mortgages (ARMs) indexed to the prime rate will benefit as banks follow the Fed’s lead and lower the prime rate to 6.5. Subprime borrowers expecting interest-rate resets will see a smaller increase in their payment, and in some cases “maybe even a decline,” according to Nothaft.
What about long-term interest rates? The most recent Freddie Mac survey of mortgage rates put the 30-year fixed rate at 5.69 percent - the best it’s been for over 2 1/2 years. Where the long-term rates go from here depends largely on the perceptions of market investors and whether they believe the Fed’s cuts will be enough to boost the economy.
Borrowers seeking non-conforming jumbo loans (those not guaranteed by Freddie Mac and Fannie Mae) will continue to pay higher rates - at least a full percentage point higher than loans below the $417,000 loan limit.
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The Author: Sandra Tuell Website: http://www.newhomes.com About: As an accredited real estate enhancement professional, interior arranger and color specialist, Sandra Tuell's expertise is in helping clients transition to a new home - first by preparing their current homes for resale, and then by creating warm and inviting spaces in their new homes that are uniquely personal. With a passion about all that is pertinent to the design, comfort, livability, and ultimately the marketability of a home, Sandra is excited to share her insights with homeowners who wish to maximize the potential of their homes. As a writer for New Homes Realty, Inc., her focus is to provide practical information and affordable tips that both inspire readers and instill the confidence to try something new. "Our personal spaces can have a profound effect on how we feel," stresses Sandra. "Everyone deserves good design. Creating beautiful interiors has more to do with creativity than money. The whole point is to create a space that makes you feel good...that you feel like coming home to." For the past four years, Sandra has operated her own interior arrangement and home staging company, Roomscapes, servicing clients in Pinellas County, Florida. She received specialized training in interior arrangement, and earned certification in real estate enhancement through Realty Enhancements International. Previously, Sandra worked in the corporate world as a marketing professional, applying her creative energy in a variety of roles including advertising, promotions, special events planning and web content creation. Her current position as a writer for New Homes Realty allows her to bring together her love of design and her educational training as a journalist. "It's really the best of both worlds," says Sandra.
This entry was posted by Sandra Tuell, on Wednesday, January 23rd, 2008 at 2:50 pm and is filed under Mortgage & Home Financing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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