Fed slashes rates to 3.5%
01-22-2008, 09:45 AM
#2
Team Owner
Wouldn't be surprised to see a positive close today. Futures were down over 500 points before the cut was announced so the market has a lot to recover.
01-22-2008, 10:00 AM
#4
Team Owner
I would also imagine that we get another 25 at next regular meeting.
Hello Refi boom!
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01-22-2008, 11:49 AM
#9
Team Owner
If the Fed is seeing signs of a slowing economy and a serious threat of recession then I think its a good move. If the Fed is doing this to bolster stock prices then its a short sighted, and wrong, move IMHO.
01-22-2008, 11:51 AM
#10
...we are still in a mess here in America... this only really helps you if you still have $...I still say we dont really have any idea where we are at from a $ standpoint until the war ends and another President has been in place for 4 years... my bottom line is that we havent hit BOTTOM yet... 
01-22-2008, 12:03 PM
#11
Big White Chocolate
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The federal funds rate affects home equity lines of credit. Mortgage rates are actually closely tied to the 10-year Treasury Note. When the yield drops, usually mortgage rates drop, too. The yield and the bond price move in opposite directions, and when interest rates fall bond prices go up, so you can expect a drop in mortgage rates. At least, that's my understanding.
01-22-2008, 12:04 PM
#12
Administrator Alumnus
Thread Starter
Originally Posted by iTimmy
Like the writing wasn't on the wall for this to happen.
Sure, the international markets had something to do with this, but again...
01-22-2008, 12:05 PM
#13
Administrator Alumnus
Thread Starter
Originally Posted by einsatz
This doesn't affect the prime rate though, right? So a mortgage refi wouldn't make sense?
Yields on the short end of the treasury spectrum (< 10 yrs) are all down this morning; there will probably be an impact on shorter term (15 year and in; maybe 20 year) mortgage rates later today or this week. These might be driven a tad lower by an additional rate cut; from what I see this morning, there is another 25 bps cut being accounted for in the treasury futures.
I don't think it will have a huge impact on the longer end, but I could be wrong. Inflation concerns might start creeping higher, which would drive treasury rates up.
01-22-2008, 04:39 PM
#17
is learning to moonwalk i
Originally Posted by KaMLuNg
i think 9k may be too low... i mean even though the market is still taking a hit today... im thinking a little higher than 9 as a prediction...
IMHO, if the Dow crosses 10k, then we will be in serious trouble.
01-22-2008, 06:40 PM
#20
I feel the need...
Why the Fed can't save us
Bernanke and company are using up their limited ammunition, but genuine problems remain with the low dollar and U.S. debt, argues Allan Sloan.
http://money.cnn.com/2008/01/22/maga...ex.htm?cnn=yes
NEW YORK (Fortune) -- Forget all those rational explanations about why foreign stocks markets, especially in Asia, have been melting down for two days. Despite what you've read, seen and heard, those declines weren't caused by fears of what a recession in the U.S. would do to the profits of companies whose stocks trade in places like India, China and Russia.
Rather, the meltdowns were flat-out market panics, where rationality gets tossed out the window as everyone tries to head for the door at once and gets trampled. Go-go markets, especially in Asia, had risen to ridiculous heights - they were going up because they were going up, and momentum fed on itself. Now, they're going down because they're going down, and momentum is feeding on itself again.
The fact that the Federal Reserve Board announced an emergency cut of 0.75 percent in short-term rates shows that the Fed thinks the problem is a market panic rather than economic fundamentals. Normally, the Fed would have waited until mid-day next Tuesday - the second day of its scheduled two-day meeting - to announce a rate cut. Announcing an out-of-schedule cut today before the stock market opened shows that its motivation is to calm the markets rather than to reinvigorate the U.S. economy.....
Rather, the meltdowns were flat-out market panics, where rationality gets tossed out the window as everyone tries to head for the door at once and gets trampled. Go-go markets, especially in Asia, had risen to ridiculous heights - they were going up because they were going up, and momentum fed on itself. Now, they're going down because they're going down, and momentum is feeding on itself again.
The fact that the Federal Reserve Board announced an emergency cut of 0.75 percent in short-term rates shows that the Fed thinks the problem is a market panic rather than economic fundamentals. Normally, the Fed would have waited until mid-day next Tuesday - the second day of its scheduled two-day meeting - to announce a rate cut. Announcing an out-of-schedule cut today before the stock market opened shows that its motivation is to calm the markets rather than to reinvigorate the U.S. economy.....
away....
01-23-2008, 10:52 AM
#23
Senior Moderator
Originally Posted by Fibonacci
10yr 4.875% ftw! 
edit: nevermind... I guess just about anywhere...
I've got 15 yrs left on a 20 year note (6% refin'd in 2003)... and if I put some money down (yeah, I know, most people pull money out), I could swing a 10 yr note for less than I'm paying now per month...
01-23-2008, 11:04 AM
#24
Senior Moderator
Originally Posted by Scrib
I wouldn't say that's completely true. Sure, a cut was expected, but I don't think anyone saw it coming before the opening of the market and at 75 basis points.
I don't think anyone saw the 75 points coming... It must be a lot worst than people have been saying...
01-23-2008, 04:11 PM
#25
Make MyTL Great Again
mortgage outlook?
Before the fed cut I was seeing mortgage rates from my local bank of:
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
01-24-2008, 04:56 AM
#27
I feel the need...
^^ It would in part depend on what your closing costs are, and how quickly you can recoup them. How long you plan to stay in your current home?
On the surface, I don't see why not...
On the surface, I don't see why not...
01-24-2008, 02:53 PM
#29
is learning to moonwalk i
Originally Posted by coconut
I will be staying for atleast 4 more years. Closing cost, maybe 3-4k?
For ~200k It should pay for itself in 4 years. The higher the principle the faster you would recoup. However, I would look at no-cost options. You won't get as much of a payment reduction, but it doesn't cost you anything extra. With rates still on the downward trend, it would suck to want to refi again and look at another 3-4k in closing costs
FYI - this does not include recouping the closing cost you just paid in October
01-24-2008, 02:54 PM
#30
Team Owner
What's the average closing cost to refinance?
01-24-2008, 09:17 PM
#32
Earth-bound misfit
Originally Posted by AdamNJ
Before the fed cut I was seeing mortgage rates from my local bank of:
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
5.875
5.75
Today I'm seeing 5.5% on a 30yr, no points. I'm thinking right now is the best time to take advantage of getting a mortgage because based on the following chart it doesn't look like 5.5% has really been hit over the last few years.
historical rate chart: http://www.mortgage-x.com/general/historical_rates.asp
What does everyone else think? 5.5% is the bottom, or is there a very good chance it will go even lower (and stay there for a month or two)? With another fed rate cut likely, I don't know.
(also posted in the mortgage thread)
01-25-2008, 04:12 PM
#34
Earth-bound misfit
Thanks! 
01-25-2008, 07:51 PM
#36
Originally Posted by coconut
I just got a mortgage in Oct. for 20yr fixed at 6.275%. Is it sound for me to refinance it at the current rate of 5.5%?
...still debating how long to wait before refinancing
any thoughts?
01-25-2008, 08:32 PM
#37
is learning to moonwalk i
Originally Posted by paz840
i'm in the same boat...i just closed 3 mos. ago at 6.275% with a principle balance just under 400K
...still debating how long to wait before refinancing
any thoughts?
...still debating how long to wait before refinancing
any thoughts?
01-26-2008, 03:33 PM
#38
Instructor
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Originally Posted by KCPreki11
So the consensus is we haven't seen the bottom of the market yet? What's everyone's predictions?
These are dark times and they don't look like they'll be getting any better soon. Just talk to the management at Citibank and ML...
01-29-2008, 01:53 PM
#39
Moderator Alumnus
The Federal Reserve may push interest rates below the pace of inflation this year to avert the first simultaneous decline in U.S. household wealth and household income since 1974, some economists and banking analysts say.
Traders and economists are forecasting that the threat of cascading stock and home values and a weakening labor market will spur the Fed to cut its benchmark rate by another half a percentage point Wednesday, after its emergency cut of three-quarters of a percentage point last week.
That would put the overnight federal funds rate, the central bank's controlling rate for loans to the banking system, to 3 percent, approaching one measure of price inflation monitored by the Fed.
"The Fed is going to have to keep slashing rates, probably below inflation," said Robert Shiller, the Yale University economist who co-founded an index of house prices. "We are starting to see a change in consumer psychology."
Adopting interest rates that are below the rate of consumer price increases, so-called negative real interest rates, would represent an emergency strategy by the Fed chairman, Ben Bernanke, and would be risky. The central bank would be skewing incentives toward spending, away from saving. That pattern typically leads to asset booms and busts that have to be dealt with later.
Negative real rates are "a substantial danger zone to be in," said Marvin Goodfriend, a former senior policy adviser at the Richmond Fed bank. "The Fed's mistakes have been erring too much on the side of ease, creating circumstances where you had either excessive inflation, or a situation where there is an excessive boom that goes on too long."
http://www.iht.com/articles/2008/01/29/business/fed.php
Traders and economists are forecasting that the threat of cascading stock and home values and a weakening labor market will spur the Fed to cut its benchmark rate by another half a percentage point Wednesday, after its emergency cut of three-quarters of a percentage point last week.
That would put the overnight federal funds rate, the central bank's controlling rate for loans to the banking system, to 3 percent, approaching one measure of price inflation monitored by the Fed.
"The Fed is going to have to keep slashing rates, probably below inflation," said Robert Shiller, the Yale University economist who co-founded an index of house prices. "We are starting to see a change in consumer psychology."
Adopting interest rates that are below the rate of consumer price increases, so-called negative real interest rates, would represent an emergency strategy by the Fed chairman, Ben Bernanke, and would be risky. The central bank would be skewing incentives toward spending, away from saving. That pattern typically leads to asset booms and busts that have to be dealt with later.
Negative real rates are "a substantial danger zone to be in," said Marvin Goodfriend, a former senior policy adviser at the Richmond Fed bank. "The Fed's mistakes have been erring too much on the side of ease, creating circumstances where you had either excessive inflation, or a situation where there is an excessive boom that goes on too long."
http://www.iht.com/articles/2008/01/29/business/fed.php
