The fed rate isnt relate to mortgage interest rates. In fact, mortgage rates can and do often rise when the fed cuts rates. We can never predict mortgage interest rates, they can change multiple times in a day. Heres a good explanation from Barry Habid, contributer to CNBC So the Federal Reserve cut rates again.

Many mortgage applicants are calling their mortgage representative and expecting a lower interest rate. Others who have been waiting to refinance are puzzled as to why mortgage rates have not moved lower during recent 5 Fed rate cuts.

In fact mortgage rates are now higher than they were before the Fed began cutting rates by in January.

Fed with no benefit in mortgage rates.

The facts may be surprising. The Fed can only control the Discount Rate and the Fed Funds Rate. This is very different from mortgage rates. Fed can change from one day to another. Treasury notes are directly pegged to mortgage rates. Finding the catalyst that causes mortgage bonds to move will give you the keys to finding out what makes mortgage rates rise or fall. Since the bond will pay a set amount over a long period of time, that amount will be less valuable if inflation is high. Over the past several years, one catalyst that seems to be working in the opposite direction of MBS prices is the Nasdaq and broader stock market. As bond prices rise, interest rates fall. You will find it remarkably similar to what Obama promises. APOLOGIZE for voting for HIM. International Community, HE was inept. Mortgage rates started dropping, EMployment got better. He ran against it then had the nerve to take credit for it. McCain will stay out of OUR wallets. THEY want you to believe.

Whatever it takes to close the deal. 18 years since World War II. If youre looking for a mortgage right now, rates are still very good. Rather than living within their means, many borrowers decided that they wanted to have a bigger, more expensive house than they could afford. With IO loans, you basically pay the minimum amount possible every month and the principal is never reduced. NO equity in the property. 800,000 at the time of purchase. LTV of 80 or lower is not considered risky in the mortgage business.

MI is basically insurance against borrower default. Countless mortgage companies declared bankruptcy. These agencies did not do their due diligence and ended up giving these investments an artificially high rating.

So investors thought the investments were less risky than they were.

So you deposit your money at the low rate of interest. Because you dont know if youll really get the return you agreed upon. He will take his money to China or municipal bonds or any other vehicle in which he can get a RELIABLE return on his money. Some regions in the USA had events that made the mortgage problems particularly bad.

For example, inflated property values in California started deflating. Condos in Florida didnt sell as thought and many sit vacant.

Sorry for such a long answer. Hope it all makes sense. 18 years since World War II. If youre looking for a mortgage right now, rates are still very good. Rather than living within their means, many borrowers decided that they wanted to have a bigger, more expensive house than they could afford. With IO loans, you basically pay the minimum amount possible every month and the principal is never reduced.

NO equity in the property. 800,000 at the time of purchase. LTV of 80 or lower is not considered risky in the mortgage business. MI is basically insurance against borrower default.

Countless mortgage companies declared bankruptcy. These agencies did not do their due diligence and ended up giving these investments an artificially high rating. So investors thought the investments were less risky than they were. So you deposit your money at the low rate of interest.

Because you dont know if youll really get the return you agreed upon. He will take his money to China or municipal bonds or any other vehicle in which he can get a RELIABLE return on his money. Some regions in the USA had events that made the mortgage problems particularly bad. For example, inflated property values in California started deflating.

Condos in Florida didnt sell as thought and many sit vacant. Sorry for such a long answer. Hope it all makes sense.