The Fed lowered the Fed Funds Rate by 0.500% to 3.000% yesterday. The move was widely anticipated and so Wall Street’s reaction was muted. Because it is tied to the Fed Funds Rate, Prime Rate also fell by 0.500% yesterday. Holders of home equity lines of credit and credit card debt benefited from the change [...]

It’s Fed Day afternoon…and one of the most highly anticipated and hotly debated Fed Decisions will be released at 2:15pm ET. It’s interesting to see the folks in the media come on the air, who earlier this morning said that a Fed cut of 50bp would immediately cause home loan rates to drop by 50bp [...]

When the Federal Open Market Committee adjourns from its two-day meeting today, it is widely expected to lower the Fed Funds Rate. This does not mean that mortgage rates will fall. In fact, using history as an indicator, we should expect mortgage rates to rise if the Fed Funds Rate falls. Remember: The Fed Funds [...]

If you only read headlines this past week, you may have missed two very important points. The first story relates to Housing Starts. Housing Starts measure the number of new homes entering the construction phase. The headline blared “Housing starts plunge to 16-year low“. If you are a homeowner, this is terrific news. Because home [...]

Mortgage rates change from day-to-day, but last week’s volatility was a record-breaker. After drooping through Tuesday and then skyrocketing Wednesday and Thursday, mortgage rates retreated slightly on Friday. By weeks’ end, rates were at their same levels from mid-December. This is in contrast to Tuesday, just after the Fed’s rate cut and before the stock [...]

Are conforming loan limits going up to $729,750.00? Kinda yes, and kinda no! Yesterday, the President and Congress worked-out an economic stimulus deal. But it’s not law yet. The plan would up the conforming loan limits for the remainder of 2008. Currently, the limit on conforming loan amounts is $417K. What’s the big deal? If [...]

(Pronounced: NEGH-ah-tive am-ohr-tih-ZAY-shun) Negative amortization is the process by which a loan’s principal balance increases on a month-over-month basis. This is in contrast to a “typical” amortization schedule in which the principal balance decreases. Negative amortization is an optional feature on some home loans. These mortgages are usually referred to by the brand names “Option [...]

The Dow Jones Industrial Average surged 631.86 points in the last three hours of trading yesterday as traders piled into equities. Fueling the rally? The bond market. For as much as stocks gained today, bonds lost. Including mortgage bonds. The dramatic sell-off created a huge swing in mortgage rates and erased nearly all of 2008′s [...]

When the Federal Reserve lowered the Fed Funds Rate by 0.75% yesterday, it was in response to economic weakness that mounted since its last meeting December 11, 2007. By contrast, the mortgage markets meet every day. Because of this, mortgage rates had already “priced in” the weakness to which the Fed was reacting. This is [...]

In a surprise move this morning – the Fed cut the Federal Funds rate by .75%, lowering it to 3.5%. They held a special meeting last night in light of US Stock futures trading significantly lower. Let’s face it, we are in a global economy and the rest of the world if really fearing a [...]