Mortgage Rates Are Going UP?
One of the most disappointing pieces of news to hit at the end of last week was that mortgage rates are going up. There has been some doubt as to whether the economy will really be helped by last week’s Fed rate cut, and in the housing market fears continue. This is driving mortgage rates back up to levels seen before Fed rate cut speculation got underway.
The main problem is that instead of helping the respectable home mortgage loans, like the fixed rate traditional mortgages, the Fed rate cut is perpetuating the problem with non-traditional mortgages. The rate on a negative amortization ARM (complete with prepayment penalty) is down, but the types of mortgages that will help the economy in the long run are the ones suffering. And the Fed rate cut may not be over, reports Forbes:
‘The market is speculating that US rates will likely move downwards,’ said Mark Wan, vice president for treasury at DBS Bank in Hong Kong.
But would another Fed rate cut really help mortgage rates? They follow closely behind T-note rates, and unfortunately, right now, the economic climate is leading T-note rates higher. So while a Fed rate cut may help, it will take a while for the effects to be felt on the housing market.
September 27th, 2007 at 11:29 am
[…] Melanie McLister wrote an interesting post today onHere’s a quick excerptOne of the most disappointing pieces of news to hit at the end of last week was that mortgage rates are going up. There has been some doubt as to whether the economy will really be helped by last week’s Fed rate cut, and in the housing … […]