|
|
Article: MORTGAGE RATES DON'T FOLLOW FED HOMEOWNERS CAN'T EXPECT LOWER INTEREST IN WAKE OF CUT.(Business)
- Article from:
- Seattle Post-Intelligencer
- Article date:
- September 22, 2007
CopyrightCOPYRIGHT 2007 Seattle Post-Intelligencer. All rights reserved. Reproduced with the permission of the Dialog Corporation by Gale Group. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
|
Byline: HOLDEN LEWISbankrate.com
Yes, the Federal Reserve cut short-term rates. No, that doesn't mean that mortgage rates will inevitably go down, especially in the short term.
A look at mortgage rates must begin with a history lesson. From Jan. 3, 2001, to June 25, 2003, the Federal Reserve reduced its target for the federal funds rate 13 times. Here's what happened to the average 30-year mortgage rate in the month after each cut: It fell eight times and rose five times. It's simply not true that a Fed rate cut automatically leads to a drop in fixed mortgage rates.
Because that point is so widely misunderstood, mortgage people wax ...