Mortgage Interest Rates: Going Up?
Rumors are flying that an emergency Fed rate cut could be in the works. While many expect a 75 basis point cut on March 18, the latest interest rate news is that an emergency Fed rate cut may be needed before next week’s scheduled meeting. The last emergency Fed rate cut came just eight days before a scheduled Fed meeting. At which time the Fed cut rates again.
With oil-based products and gasoline taking more of the consumer dollar, a relief on the credit side would be more than welcome. The problem the Fed has is that most banks are not passing lower rates on to businesses and consumers.
Even though banks are getting lower rates, and they have been getting lower rates with the Fed funds rate at three percent. they still aren’t passing them on. Perhaps the rate cuts will be passed on when the Fed funds rate makes to an expected two percent by the end of April.
In the case of mortgage interest rates, though, it doesn’t matter that much anyway. Last week, mortgage interest rates went up. And an emergency Fed rate — or any Fed rate cut for that matter — is unlikely to change anything.
The reason for this lies in the fact that mortgage interest rates, with their long-term nature, are more tied to 10-year Treasury notes than they are to the short-term Fed funds rate. This means that when inflation goes up (and it is on its way) mortgage interest rates follow the bond rates higher.
If you haven’t refinanced to a fixed mortgage rate yet, you could be in for a bumpy ride.
Tags: mortgage interest rates, mortgage rates going up, home mortgage loan, mortgage loan blog,
credit market pressures, emergency Fed rate cut, Fed rate cut news
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