The 30 year fixed mortgage rate is pushing closer to the Treasury's 4.5 percent mark in the latest reading. With the Federal Reserve expected to cut rates will it have a negative impact on mortgage rates?
According to Zillow Mortgage Marketplace 30 fixed mortgage rates fell 0.19 percent from last week to an average of 5.15 percent. The 15 year fixed mortgage rate also fell week over week and now averages an even 5 percent.
The 5 year adjustable mortgage rate showed a slight increase week over week of 0.01 percent to average 5.94 percent. With expectations of a Fed rate cut of short term rates however, the 5 year arm may show improvement over the coming days and weeks.
Speculation is that the Federal Reserve is going to be cutting interest rates by at least 0.50 percent. If that happens, the key interest rate will be sitting at 0.50 percent, the lowest since the 60s.
The downside to an interest rate cut is that investors will begin to pull their money out of bonds and place it into other investments. What this does is drive long term mortgage rates up as mortgage rates are tied into the bond market. When bonds go down, mortgage rates go up and vice versa.
Keep an eye on mortgage rates and the Fed rate cut by visiting Future Planning Financial at www.fpf-direct.com.
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