Sacramento Real Estate Views

Are you FED up?

Who the heck can figure out what’s going on with interest rates right now? The FED lowers the prime rate which, in the past, has brought down the cost of borrowing. But not this time. So what’s the problem?

The credit/mortgage crunch that started in 2007, and now with inflationary concerns, is still and will continue to affect the real estate market for some time to come.

While FreddieMac.com is reporting an average interest rate of 5.72% for a conforming 30 year fixed, lending rates are up. Two rate decreases in the last 2.5 weeks, FreddieMac reporting well under 6% yet getting a fixed rate below 6% without paying points is next to impossible. To say this reflects a lack of confidence in the economy is an understatement.

While the FED is considering another rate cut, the concerns over inflation are pushing mortgage rates higher. The bond data is good but inflation is the real concern at the moment. Until the concern over inflation subsides, don’t expect a decrease in mortgage rates.

The rule of thumb? FED rate cuts do not always mean that mortgage rates with follow suit. There are many more economic factors that enter in to the mix that determine what lenders will charge for their money. For more on this, check out this article from MortgageNewsDaily.com. Great place for “truth in lending”.

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Tags: interest rates, mortgage rates, the fed

This entry was posted on Saturday, February 16th, 2008 at 12:25 pm and is filed under Real Estate Market Commentary. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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