Moore Mortgage Solutions

    In a surprise move at 8am EST, the Fed cut the Fed Funds Rate by .75%. The Fed Fund Rate is now 3.5%. And the Fed also cut the Discount Rate to 4.0%. This is the rate that member banks can borrow from the Federal Reserve.

    The reasoning behind this is that stocks were being sold off sharply around the world yesterday. And s the market opened this morning, stocks dipped at one point to their lowest levels since January 2000.

    What does this mean to Mortgage Bonds? This morning’s sell off caused the Mortgage Bonds to trade higher reaching their best levels since June 2005. Translated, mortgage rates are at their lowest level since June 2005. But because of the volatility of the markets, this can turn causing the Mortgage Bonds to drop and mortgage interest rates to go back up.

    Remember as money flows into stock market, they are taken out of the bond market. And in turn causes mortgage rates to go up.

    What is a consumer to do? If you have a home mortgage, now is the time to look at refinancing your present mortgage. And if you have a negative amortization rate mortgage, again now is the time to look at refinancing or get a strategy together to off-set the recast period.

    As an added note, the market is still expecting the Fed is cut the Fed Funds Rate an additional .50% during their regular scheduled meeting next week.

    If you have any questions about the market, would like to talk about the possibility of refinancing your home mortgage, or get approved to buy a new home, please do not hesitate to contact me.

    Until then, make every day an inspired one!

Betsy Moore

betsy@mooremortgagesolutions.com