What are Mortgage Rates REALLY Based On...and What Causes Them to Move?
By Elizabeth Rose, Certified Mortgage Planning Spec - Texas
(Premier Nationwide Lending, NTFN #75333)
Whenever the Fed announces a Fed Funds Rate cut as they did last week, the Media typically gets it wrong which leads to much confusion for the consumer. Since the Fed cut last Wednesday, several people have contacted me expecting this will mean lower long term rates. WRONG. Since this might seem confusing, let's unpack this... The Federal Reserve Bank controls the Fed Funds Rate, an interest rate that banks lend money to each other for overnight borrowing and this Rate is most commonly tied to Home Equity Lines of Credit , Auto Loans and Credit Cards. Whenever the Fed decides to take action, either by cutting or hiking, it bases its decision on two factors - promote economic growth and maintain price stability, which means keep inflation in check. Last week, the Fed cut by an aggres...
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