Does The Lower Fed Lending Rate Result In Lower Mortgage Rates?

I found this article by Tim and Julie Harris from Broker Agent News and thought that this article is too good to paraphrase. Here it is for your enjoyment (or just to answer your questions):

"The Federal Reserve has been lowering rates to bail out the economy. Does this mean that that mortgage rates will fall?

In some cases yes, in most cases no...read on.

Lets start with the 30-year fixed rate mortgage. The 30-year fixed rate mortgage is not tied to short-term treasuries. Fixed mortgage rates are tied to long-term bond yields that move based on the outlook for the economy and inflation. True, even as the Fed has lowered rates, the 30-year fixed has come down, but that's because of the outlook for slower economic growth in the months ahead. While the decline in treasury yields has helped push mortgage rates lower, the decline in long term rates hasn't been in lockstep thanks to the fact that these mortgages are securitized and sold on the global market. Investors now demand a higher risk premium on these mortgages due to higher delinquencies and foreclosures.

Next lets take a look at 7 and 5-1 Adjustable Rate Mortgages (ARMs) Yes, this is good news if your 5-year (or 7 year) ARM is pegged to a treasury index. So if you're facing a reset on, say, a $200,000 loan, you're now getting a payment increase of about $150 a month, as opposed to $370 a month, which you would have had before the Fed started cutting rates.

Do the Fed Rate Drops Help Sub-Prime mortgage Holders?

Nope. Unfortunately if you have a sub-prime ARM it is more than likely pegged to LIBOR, which has moved in the opposite direction. Because of the liquidity issues in global financial markets, LIBOR rates have actually increased at the same time that treasury and other benchmark yields have been declining, so the Fed lowering rates today would not help too many sub-prime mortgage holders.

How are Home Equity Lines of Credit Effected?

How about my Home Equity Line of Credit (HELOC): Yes, if you have that home equity line of credit that you used to renovate your bathroom/kitchen recently, then when the Fed lowers rates, your rate comes down as well. That’s because HELOCs are predominantly pegged to the prime rate, which moves in step with the Federal Reserve. "

Just Sold!

Some of my first-time homebuyers just purchased a condo in Jamestown of Grandview. This desirable condo community is located near Grandview Avenue. These condos have been selling very quickly since their conversion from apartments just a few months ago and now are nearly sold out. Look for them on your favorite real estate website or call me for more information!

There are many reasons to be optimistic.

The job market in central Ohio, which plays an important role in creating a continual flow of prospective home buyers, is extremely bright. According to the Bureau of Labor Statistics, in the past 16 months central Ohio has seen more than 5,100 jobs created - 11,200 over the past 24 months.


Columbus will boast the nation's 8th fastest home sales rate in 2008, predicts Forbes.com and Moodys.com. A recent study by these credible sources also sees that home prices here will increase 3.49% in 2008.


Columbus was ranked the nation's 6th most stable market by Standard & Poor's. According to this report, our market has less than a 10% chance of experiencing falling home prices.


Sales in central Ohio will rise in 2008, according to the Chief Economist of the National Association of REALTORS®, Lawrence Yun. This is not expected to happen in every market.


Unlike the erratic home prices in California that have more than tripled since 1995, prices in central Ohio have been solid and stable. Therefore, we did not experience the same dramatic decline as cities like San Diego when people began to see that prices were out of line with the economy.


Because our housing market is "sure and steady," we may be the first region of the United States to see a significant boost in appreciation, according to the Chief Economist of the National Association of REALTORS®.


The high interest rates that have characterized past recessions are nowhere in sight. Therefore, The National Association of REALTORS® predicts that economic expansion will slow in 2008, yet we should avoid a recession.


We hear encouraging news every day about central Ohio's economy. In early March Forbes.com, named Columbus the "#1 Up-and-Coming Tech City."
Information taken from www.columbushousingfacts.com.

Foreclosure

There's been a lot of coverage in the media about foreclosures. So, what should you do if you find yourself in a situation where you can't make your payments? Here is a list of ten steps released by the U.S. Department of Housing and Urban Development (HUD) that you should take. Remember, the bank doesn't want your house back and wants to work with you to keep it!

1. Don't ignore the problem.
2. Contact your lender as soon as you realize that you have a problem.
3. Open and respond to all mail from your lender.
4. Know your mortgage rights.
5. Understand foreclosure prevention options.
6. Contact a non-profit housing counselor.
7. Prioritize your spending.
8. Use your assets.
9. Avoid foreclosure prevention companies.
10. Don't lose your house to foreclosure recovery scams!

http://www.hud.gov/news/release.cfm?content=pr07-105.cfm

Portrait Homes

The condos at Gabriel's Landing have been selling quickly! Just within the last week we're written three contracts. If you're thinking about Gabriel's Landing, don't hesitate to put a hold on a condo because your favorite unit may soon be gone!

Just Sold!

Just Sold! Two of my first-time home buyers purchased this Dominion Home! Everything went well and they are very excited about moving in this week! Congratulations, guys!