Market Conditions in USA>Question Details

Juan Hernand…, Other/Just Looking in 95004

should we expect a rate cut from the feds? and how often the feds discuss and decidede on rates ?

Asked by Juan Hernandez, 95004 Mon Sep 10, 2007

Help the community by answering this question:

Answers

7
Ed - Patrick - Jim:
I don't believe the media, the feds, or the "government" has been able to synopsize as well as the three of you. I believe the consumer is so confused with all the hub-bub, they are sitting in a corner waiting for the explosion...

The banks are looking for a drop - so they can get more funding. Then we are to assume later on (trickle down theory) that the consumer will benefit somehow... Lets cross our fingers and hope the banking fairy is feeling froggy.
3 votes Thank Flag Link Tue Sep 11, 2007
Hey Jaun,
The Fed will meet a total of 8 times this year, the next meetings are 9/18, 10/30&31, and 12/11
The kids on wall street have all agreed on a rate cut of .25 percent .
It is my opinion we may see a .50 rate cut.
Don`t let me down Ben.

By the way the fed can raise or cut rates at any time they don't need to have a meeting. -
2 votes Thank Flag Link Mon Sep 10, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
If you are looking to lock in a loan, I would do it before Sept 19th (the day AFTER the announcement). See what your rate is now. Tell your loan officer that if it goes down by a half a point to lock it in. If on Sept 17, 18 or 19 it goes down by a quarter point, lock it in. If on Sept 19 it is the same or a quarter point higher, lock it in. YOUR rate can change several times a day. This is just my own gambling advice. As Ed said, the 30 year fixed is the only game you should be playing now (unless you can afford a 15 year fixed). Rates are still at historical lows. Don't let the game prevent you from buying a home. As they say, "A wrong decision is better than no decision." A half a point is nothing compared to throwing away money on rent for 30 years.
Ruth
1 vote Thank Flag Link Tue Sep 11, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
I was listening to Jim Cramer this morning. He was on Meredith Vierras Today show, so he wasn't screaming for a change. -- So Cramer says Ben and the Fed Governors are a bunch of academics who will "study" the situation ponderously from their ivory tower. They will not act in a timely manner according to Cramer.

Meredith had a water glass half full - half empty sitting on a stool. - Cramers judgement is that the glass is half empty and is going to get emptier.

Wall street will get its rate cuts, but they won't be half a point on Sept 18th and they probably won't go by more than a .25 per meeting. unless the market tanks another thousand points off the dow. At that juncture a full percentage point off wouldn't help much.
1 vote Thank Flag Link Mon Sep 10, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
They raise their heads every month to talk about what's really going on. Will they reduce rates? They have to. Lenders don't have enough money to lend so they have to borrow. That, by the way does not equate to an interest rate reduction on mortgage rates. Countrywide, the nations largest mortgage lender had a 15 billion dollar line of credit. They hit it for the whole 15 billion. Sent their stocks through the floor.

The rate the feds are cutting is the rate they charge banks for money. Not our mortgage rates. If it ends up in a surpluss lenders will drop rates, "a little" to be competitive. Don't count on adjustables to drop or short term fixed rates to drop. Keep your eye on 30 year fixed rates. That is the only game in town right now.

Go figure... conforming rates dropped with the last rate cut but jumbo loans didn't. What's up with that?

The government is again involved so hold onto your hats.
1 vote Thank Flag Link Mon Sep 10, 2007
Juan: This is a bit of a delayed response to this 2007 question, but I here this question asked routinely. It is worth discussing. I love this question.

First, the RATE the FED cuts or increases IS the Federal Funds Rate. This is the rate that depository institutions banks charge other depository institutions for overnight lending (to be sure their 10% reserve requirement has been met). It is NOT the interest rate on mortgage loans – see LINK: http://tinyurl.com/23prtb

Second, the FED (FOMC) has 8 “scheduled” meetings yearly. Unscheduled meetings occur when all hell breaks loose in the economy or for “better timing” purposes.

Third, the FED’s upward and downward adjustments in the Federal Reserve Rate do NOT mean mortgage rates will follow. They are NOT related. But, money rate fluctuations do impact the banking industry. With time, there MAY be an increase or decrease in mortgage rates – or the opposite effect (if the availability of federal reserve funds stimulates inflation. See LINK: http://tinyurl.com/6db33k

The Federal Reserve Board members think they have their hands on the pulse of the economy, but there are no guarantees. So if one is considering LOCKING LOAN rates based on Federal Funds Rate activity, you may want to check with your bank and keep up with what the pendants in finance are saying. Their guess may be better than yours. Basnkrate.com is a good website to monitor this issue. I really like their Mortgage Rate Trend Index -- see LINK below.
Web Reference: http://tinyurl.com/2um38
0 votes Thank Flag Link Sun May 25, 2008
Hey Jaun,
The Fed will meet a total of * times this year, the next meetings are 9/18, 10/30&31, and 12/11
The kids on wall street have all agreed on a rate cut of .25 percent .
It is my opinion we may see a .50 rate cut.
Don`t let me down Ben.

By the way the fed can raise or cut rates at any time they don't need to have a meeting.
0 votes Thank Flag Link Mon Sep 10, 2007
Mr.P, Other/Just Looking in Arizona
MVP'08
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer