Fed Lowers Funds Rate to 3.5% - Mortgage Rates Drop

In a surprise move, the Fed lowered the Funds rate by 0.75% before their meeting scheduled on January 30, 2008 (it's still anticipated they will lower the funds rate at this meeting). 

"The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth.  While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households.  Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets."

The Fed also lowered the rate they lend to member banks, the Discount Rate to 4.00%.

These rates do not directly impact mortgage interest rates (except for HELOCs which are based on the Prime Rate); however investors may (and will) react to these Fed moves which will effect mortgage interest rates.

Here is an example of some current rates based on an owner occupied home with an appraised value of $500,000 and a loan amount of $400,000 utilizing a full doc mortgage with minimum credit scores of 680.   

UPDATE 1/22/2008 12:00:  THESE RATES HAVE ALL READY CHANGED!  Please contact me for a customized rate quote for your personal scenario.

Purchase - 30 Year Fixed Rate at 1% Origination/Discount 30 Day Lock: 5.125% (APR 5.264%).

Purchase - 30 Year Fixed Rate at 1% Origination/Discount 45 Day Lock: 5.250% (APR 5.390%).

Purchase - 5/1 ARM at 1% Origination/Discount: 4.875% (APR 6.756%).

Refi's are based on a 45 Day Lock.   Should your LO quote 30 day locks, be sure to ask who (you or the LO) will pay for the extension should the loan not close prior to the 30 day time period.  We are entering a market will refi's will take longer to close due to underwriting tightening, increased volumes and reduced staffing at mortgage companies (any or all of these factors may impact your preferred mortgage vendor).  If you have a complete loan package to provide your Mortgage Professional, you might be able use a quicker lock.   Refi rates shown below are based on zero origination/discount points.   Typically, but not always, 1% in origination/discount point equals 0.25% to rate.  It is your choice how your mortgage is priced. 

Rate/Term Refi 80% LTV - 30 Year Fixed at 0% Origination/Discount: 5.500% (APR 5.551%).

Cash Out Refi 80% LTV - 30 Year Fixed at 0% Origination/Discount:  5.750% (APR 5.803%).

Cash Out Refi 70% LTV (loan amount $350k) - 30 Year Fixed at 0% Origination/Discount:  5.500% (APR 5.563%).

Again, these are just a few quick samples of rate quotes...which may be better or worse by the time I post this!   For your personal rate quote, please contact your qualifed Mortgage Professional.