Michael Creed's Blog

With the emergency Federal Reserve rate cut earlier today (01/22/2008), I thought it would be a great idea to explain why your mortgage rates will probably not change because of the latest cut. 

Yahoo! Finance has a great article that you can read here to learn all about it; I couldn't have said it better myself.

If, in the future, the link above doesn't work, you can use this link to access a PDF of the article.

Please let me know if you have questions.

UPDATED 01/25/2008 5:29 AM: Because of this drop in the Fed Funds Rate, the stock market rallied on Wednesday causing a major sell-off of treasury bonds (so that those with their money in bonds could get their money into increasing stocks) and the price of the bonds dropped dramatically.  When the bonds' price drops, the yield of said bond will, in turn, go up.  Mortgages typically follow the same trends as the yield of a bond.  Because of the trading of the bonds late Wednesday and after hours, the mortgage rates went up 0.5%+ from the close of business on Wednesday to the opening of business yesterday.  See this article for a more detailed explanation.