The Federal Reserve recently cut the federal fund rate by another .75%. The federal reserve is expected to meet again next week and all signs point to them further cutting interest rates by another .25%-.5%. This has been done as a desperate attempt by the Fed’s to stave off impending rescissions in the US and even globally.
The rate cuts are meant to add liquidity to the credit markets but one of the largest side effects of such action is that mortgage rates fall affording homeowners savings of thousands of dollars by refinancing their homes into new lower fixed rate mortgages. Yesterday we saw the 30 year fixed rate fall to 5.3% and we expect that in the very near future we will be seeing 30 year fixed rates in the mid to high 4% range.
Since the cut there have been yo-yo pricing with lenders nationwide. The banks are attempting to get a handle on the situation and therefore we are seeing pricing adjustment multiple times daily. Now is definitely the time to lock in your fixed rates on a new mortgage or refinance and take advantage of the Fed’s aggressive rate lowering tactics.
We are advising all clients to lock in as soon as possible since we can always relock if pricing improves over time. If you have ever thought of purchasing a home in Florida now is most definitely the time to act. The new historic low rates combined with an onslaught of surplus inventory in housing is creating a never before seen buyers market. A buyer even with bad credit is able to get 100% financing on a 5.5% 30 year fixed loan. Due to the buyers market we are seeing the seller pay for all closing costs including home owners insurance and other recurring costs so that buyers are literally getting into houses with no money out of pocket at all!
For those of you with Arm’s about to adjust now is the time to lock in that fixed rate and avoid the headache and worry of an ARM adjustment down the road. Sitting on the fence and waiting at this point seems like an extremely bad bet in our opinion. We are nearing the bottom of the interest rate pricing and now is the time to act to take advantage of it. Even with a slow down in the economy fixing your ARM into a new low fixed rate mortgage will save you thousands upon thousands of dollars if you wait and rates go up or your ARM adjusts.
For those that already have fixed rate mortgages above 6.5%, a rate reduction of at LEAST 1% in your mortgage can mean thousands of dollars in savings. We have very low closing costs scenarios and we can show you exactly you much money you will be saving monthly, and over the life of your loan should you lock in at a lower fixed rate mortgage now.
These are historic times in many ways for our country. In particular our economy is experiencing sever turmoil and the global economy also is following the US turmoil so that we now have global economic disruptions. Keep in mind that over 250 lenders have gone bankrupt in the last 12 months. Even the Nations top lender Countrywide has been sold to avoid bankruptcy. Lending guidelines continue to tighten and we expect further restrictions as the economy further slows over time. Don’t hesitate. Now is the time to take advantage of the market and lock in your low 30 year fixed rate. We look forward to servicing as many of our clients as possible and assist them in taking advantage of this incredibly huge savings opportunity we are presented with.