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Jerry, Other/Just Looking in Philadelphia, PA

will the fed be lowering the prime raate anymore?

Asked by Jerry, Philadelphia, PA Sat Jun 6, 2009

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Jerry,
The prime rate is so low right now it's ludicrous. The Fed however, doesn't lower the prime rate, they lower the Fed Funds rate. The prime rate is then calculated by adding 3% to that.
I'm not sure why you are asking but just for clarification, a lower fed funds rate and/or the primes rate does not have any direct impact on home loan rates with the exception of a home equity loan. In fact, lowering the Fed Funds rate can sometimes have a negative impact on home loan interest rates.
You can check out sites like http://www.marketwatch.com that helps track market movement and can give indications of movement by the Fed and what economic factors impact such decisions.

With all this stimulus money floating around I wouldn't be surprised to see the rate go up as we try to combat such inflationary actions.

Hope this helps.

Micki
0 votes Thank Flag Link Sun Jun 7, 2009
Hi Jerry,

That is a very good question. No one can tell you that because we do not have crystal balls. However, if you want a low interest rate why not pay a point or two and get a really low interest rate. Ask your favorite tax professional about that strategy and see if this helps you. Good luck
0 votes Thank Flag Link Sat Jun 6, 2009
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