It’s tough for hard working loan officers to overcome the media hype that accompanies a “dramatic” Fed move in rates. Is a 1.25% cut in 8 days in the Fed Funds rate “dramatic?” Absolutely. Does it mean that conforming loan rates are 1.25% lower than they were last month? Absolutely NOT.

Mortgages are priced off the 10-year Treasury bond – a wholly different instrument than the Fed Funds rate or the Fed discount rate. Currently, the yield on the 10-year note is hovering at around 3.60%. That yield gives us 30-year mortgage rates under 6%, which is much better that seven or eight months ago.

This move by the Fed will certainly help homeowners who are currently in adjustable rate mortgages. It can even be advantageous to recent home buyers who locked their rates in the 6.5% range last summer. Depending on the size of their loan, a refinance may be in order. And, it’s certainly a GREAT situation for home buyers in the market right now – they can buy more house for the same monthly payment they were looking at last year.

The rate cut seems to be having the immediate sought-after effect – a shot in the arm for the ever popular “Spring” housing market. Now is a great time to buy – there is lots of inventory out there to pick from and great financing options.

Written By:
Terri Landa
Mortgage Advisor
Coldwell Banker Home Loans
Office: 847-382-3780
Cell: 847-921-6817
Email: terri.landa@mortgagefamily.com
TerriLanda.ColdwellBankerHomeLoans.com

Tags: 60010, Barrington, Barrington Real Estate, Illinois, Mortgage, Interest Rates, Fed Rate Cut, Home Buyers, Refinance, FreddieMac, Home Financing