Federal Reserve Cut Interest Rates

March 18th, 2008
The Federal Reserve cuts their rate by 3/4 a point, lowering the rate to 2.25% What does this mean to the mortgage industry? Well, we are not sure. Most of the projections that are being broadcast is that 30 year interest rates are on the rise despite the rate cut. The mortgage industry is going through multiple changes daily. What is causing all the unrest and multiple changes? Many of the banks and mortgage companies that you go to get your mortgage, will give you a initial loan for your home, they will then take your loan and file and try to sell it on what is called the "secondary market". This market is for the buying and selling of mortgages. When the buyers on this market decide to stop buying a certain type of loan or mortgage, the industry will change, so that they can create more loans that will appeal to the buyers, thus creating a change in mortgage loans that are available to the consumer.
The Federal Reserve stated that the rate cut was done to help a slowing economy and falling job market. They did not how ever state that the cut was implemented to help the real estate market or to get mortgage rates to drop. All we can due is watch to see what happens and hope that rates will not rise and hurt an already struggling real estate market.