Real Estate News You Can Use
March 2008
Risé Johns ASR®, CRS®, GRI
Mortgage Rates—Short Term vs. Long Term
Early in February the Fed (Federal Reserve’s Open Market Committee) lowered the federal funds rate by half a point to 3%. In the prior eight days, the Fed had cut rates by 1.25 percentage points, the fastest pace in 20 years. This is almost unheard of.
The first question many have called me to ask is “With interest rates reduced, should I refinance my home?” Unfortunately, if you are looking to purchase a home or to refinance, I’m not sure you’ll see mortgage rates fall. When writing this article, the average rate for a 30-year fixed mortgage was 5.48% one of the lowest rates since 2004.
Fixed interest mortgage rates are set by markets based on long-term money rates, not short-term rates. Interest rates for other consumer products could drop. Adjustable-rate mortgages and some credit card rates are tied to short term rates that closely follow the federal fund rate set by the Fed.
Consumers will see rates on home-equity lines and credit cards tumbling over the next few months. With home-equity rates falling, it will present an opportunity for financially well-positioned homeowners with significant amounts of equity to borrow at a very attractive cost. WARNING: DO NOT use the lower credit card rates as an excuse to pile on more debt or to put your debt repayment plans on hold.
Risé Johns has been involved in real estate for over 27 years. Her knowledge, experience and customer service will make your next real estate transaction a smooth one. Call Risé at (512) 267-LAGO for “World Class Service.”
