Impending Rate Cuts: Good News for Real Estate Market?
Are predictions this morning that the Federal Reserve will cut the federal funds rate by up to 3/4 of a percentage points in the coming weeks likely to have much impact on the local real estate market? While a reduction in the Fed’s benchmark rate is no guarantee that longer-term rates and, by extension, mortgage…
Are predictions this morning that the Federal Reserve will cut the federal funds rate by up to 3/4 of a percentage points in the coming weeks likely to have much impact on the local real estate market? While a reduction in the Fed’s benchmark rate is no guarantee that longer-term rates and, by extension, mortgage rates will drop and a Fed cut won’t necessarily make it easier to get a mortgage in the wake of the sub-prime crisis, there’s likely to be some psychological boost to the market. In New York, it seems like good timing given that those bonus checks will start clearing in the next couple of weeks. Think it’s meaningful or a lot of hot air?
Fed Chief Signals Further Rate Cut [NY Times]
“So, 5/1, 7/1, & 10/1 ARM’s IO could be benefiting from this? Thanks for your prior info also.”
Forget about Arm and Interest only Mortgages. Banks don’t make those loans anymore. FYI The Arm and IO loans are tired to LIBOR at the 10 yr T-Bill.
If that’s true, how come my HELOC payments got bigger this month even though the feds have been cutting rates? Can I expect them to go down again next month?
OH Fuck, You know that HELOC’s are ‘callable loans’ right?? I know some of you assfucks are going to argue with me!! Look at the HELOC the bank can say “Fuck you pay me!” at a moments notice. Pray to GOD you did not buy bullshit with that money because, they will make you SELL that shit to recover their money!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The What (Laughing My Ass Off)
Someday this war is gonna end…
If that’s true, how come my HELOC payments got bigger this month even though the feds have been cutting rates? Can I expect them to go down again next month?
12:58pm
So, 5/1, 7/1, & 10/1 ARM’s IO could be benefiting from this? Thanks for your prior info also.
@12:42 PM.
I’m curious as well. I’m in the process of buying and I need to contact my mortgage lender and get some answers! I hope it’s good news for us.
12:42
15 & 30 yr fixed mortgages are tied to the Bond/Treasury markets – only loans linked to Prime really see any short term effect from Fed interest rate changes.
How soon until we can see the mortgage rates and especially the jumbo loans being affected by the proposed 50bbp reduction at the end of the month and proposed rate reductions in the spring & summer? Will the loans that are being written today and to the end of this month see any reductions?
I think the article actually suggests a 50 bps rate cut at the next meeting and then another 75 bps of cuts through to the summer taking the funds rate down to 3% or lower by the summer. I dont know how you can rule this out given the sharp deceleration that seems to started sometime around Oct. Still wouldnt see that helping real estate too too much given stricter underwriting and the fact that prices are still pretty high most places and consumers are pretty stretched.
Given that most signs point to the fact that the economy is already in recession, a rate cut should help mitigate the duration. However, the liquidity/asset bubble of the last 7 years will take a while to work through…with tighter underwriting standards etc. don’t expect any immediate improvement in liquidity/lending etc. The financial service industry is significantly weakened and this will have a trickle down affect throughout the NY economy…layoffs to come, 2009 bonuses to be hit, increase in taxes to cover budget shortfalls and so on. It won’t be the apocalypse, but it will not be pretty either.
Only the Goldman Sachs people will be getting bonus checks this year. Layoffs are beginning to occur among Wall Street law firms with structured finance lawyers leading the way, followed by those doing M&A work. We are about to experience a white-collar recession similar to what happened between 1987 and 1992. Low interest rates may not make much of a difference if people are uncertain of where their next dollar is coming from.