Mortgage Rates News

If fed cut rates, would mortgage rates also go down?

I know the mortgage rates is correlated to the 10 yrs note rate. But what about when u hear about fed cutting rates. Does that also affect the mortgage rates? I heard on the news that the fed will cut more rates because of a fear in recession. So if fed cut rates, would mortgage rates also go down? What else affect mortgage rates beside the things I mention above?

Public Comments

1. When the Fed cuts prime rate it has no directo correlation to mortgage rates. To go one step further, depending how the investors on wall street view the FEDS decision it could make rtes swing either way. Example, last time the Fed cut rates, the investors wanted a 1/2 opint cut, they got a 1/4 point cut, mortgage rates went up. There are alot of different variables that effect mortgage rates, employment reports, oil prices, etc. And to a certain extent what blows up in the Middle East on any given day. As a general rule, a cut in the Prime Rate effects, HELOC's, credit cards rates, and auto loans.
2. Fed doesn't have much effect on rates in the conforming world of mortgages. Notice the key word there "conforming" . They will eventually fall but it will be because of performance on Wall Street. When the Bull's are running wild, thing's humming along, and everyone wanting what you are selling ,rates will be higher than when market is falling, recession is looming, gas heading to $3.75 a gallon by summer, are you buying? Before the days of Wall Street being involved with mortgages, things were volatile with regards to interest rates. Rate locks? No way. Rate you got at the end was rate you got, but when loans started being sold to Wall Street, investors wanted to know what would be delivered when deal was final. Thus the arrival of rate locks, and here you thought it was for consumer protection.