Aw come on and sing along with me (Benny and the Jets). Ben just surprised many by dropping both the Fed Funds and the Discount Rate by 0.50%. It’s too soon to tell how this may impact mortgage interest rates…however it (the Fed Funds rate) directly drops the rate home equity loans are based on to 7.75% (Prime Rate). You can see by the chart below that waiting on rate reductions from the FOMC to impact long term mortgage interest rates may not be the move for you to make.
Chart compliments of Loan Tool Box
The Fed based this reduction due to ” the tightening of credit conditions has the potential to intensify the housing correction”. To read the entire press release, click here.
On the first Friday of every month, the Jobs Report comes out. Tomorrow is the big day. As I’ve written about this topic before, this economic indicator tends to have a huge impact on mortgage interest rates.
It is the consumers choice to float or lock a mortgage interest rate. My preference is generally always to lock. Especially during these historic times in the mortgage industry. Locking in a mortgage interest rate not only secures that rate for your loan, it may also preserve that mortgage program. With some lenders pulling back on certain programs, a few of them are honoring the loans that are locked and underwritten.
Please do not assume that your mortgage rate is locked. Make sure you have a written lock confirmation (a Good Faith Estimate is not a lock confirmation). If you have a mortgage in process, you may want to contact your Mortgage Professional to confirm it is locked and what their read is on the current situation.
It pays to be extra cautious right now.