Mortgage Rates

jkp77 · Joined: 30 Oct 2008 Posts: 1

Hi,

I was wondering what does one look for to reduce the interest rates on loans?
I saw the Fed reduced "rates" by a half a point this week. Then I saw the mortgage interest rates went from an avergae of 6.0%(last week) to 6.4% today!?
I thought when the Fed reduces the rate, then the money from bank to bank is cheaper to borrow, giving the customer a better interest rate. Am I wrong?

joe1 · Joined: 11 Nov 2008 Posts: 20 Location: California

Yes, the FED moves do affect home loan interest rates, but not instantaneously. In general, the 10 year bond is a better indicator to figure out if rates are going up or down. We are currently in the middle of the greatest credit crunch this country has seen in a long time, and the markets are unstable. Thus predicting where interest rates are headed is not possible.

EricJ · Joined: 09 Jan 2009 Posts: 321 Location: New Jersey

In addition to what Joe said, quite often the banks anticipate the Fed's actions and slowly move the rates in that direction prior to the actual announcement.

rose123 · Joined: 09 Nov 2009 Posts: 3

Mortgage has been in the system for quite some time and the most important thing that affects the whole system is the mortgage rate. This rate is the thing that helps to calculate the overall interest and the years that the person will have to pay the interests. Hence it is indeed one of the main things in the mortgage that needs to be seen thoroughly and carefully.

Some might be thinking that does this mean that if my current rate was 5% instead of 10% I would pay half and be free in half the years, then you are exactly right. And that is the whole point of it and that is the reason why certain companies provide you simple guidance for all the ways that can help you drastically reduce your mortgage rates. Some of the ways are as follows; first let us see how mortgage rate can be altered, the first thing that one should do is be aware of all the current mortgage rates that are present in the market. The next step is to see how you can get a low mortgage; the first thing is to have a clear and a positive credit report. It is not necessary that you should make large transactions to make it look better, the basic think checked is your regularity, and if one has a steady input and output then the mortgage interest rates that he will get will obviously be very low. The biggest thing is to not be a defaulter of any bank. The second think is to have a small mortgage on other things, and have a steady income by which you can repay the amount. The basic thing that is checked is the steady income and according to the mortgage rate calculator and the interest rate calculator, the number of years becomes very important, if you are capable of repaying the loan or then the overall rate would definitely be less.