fter 12 rate increases by
the Fed, it does appear What Does It Mean To You?
that the real reason behind
the Fed action is to apply the Adjustable Rate Mortgages
brakes on inflation. The Fed
seems confident that economic ARMs have the most one for one
growth is on track but wary that relationship with the Fed Funds
costlier energy could "fuel" rate -- they are usually indexed
dangerous inflation. From all against the one-year Treasuries
reports it is working. All types which are tied closely to the Fed
of borrowing will cost more. On Funds Rate. Every borrower will
the "Sunny-Side" savers will feel the pain when these rates go
shortly see a bump in the meager up
interest they are receiving as
deposit interest runs opposite to Some borrowers who recently got
loan rates. an ARM may know that their rate
can only go up a maximum 2 points
The Federal reserve today raised
the Fed Funds Rate 1/4% to 4.0%
The federal funds rate is the If interest rates go up two
rate banks charge each other for percentage points on a $216,000
overnight loans to comply with mortgage ( About the average in
the Fed's reserve requirements. the U.S.) Borrowers could be on
By buying or selling Treasurys in the tab for $269 more a month.
the market, the Fed can set the
interest rate and influence the Fixed Rate Mortgages
price of credit. Th ePrime Rate,
that many members understand will The Fed plans deliberate future
shortly be raised the same increases also meaning fixed
amount. mortgage rates may continue their
rise. equity in the home and are pegged
to one-year treasury yields or
If Mortgage rates go up 1 Point, the prime, which move in lockstep
the above $216,000 loan would with the Fed rate.
cost $140 more per month (5.4% vs
6.4% If you are in the process of
borrowing now, it may well pay to
Lines of Credit Tied To Home —LOCK IN THE RATE TODAY as the
Equity full effect may not hit for a few
more weeks. After that look to
These loans are mostly always pay about $100 more per month on
tied to the Prime rate so expect $100K loan.
a rise in the very near future.
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These loans are ties to the
About the Author:
Bob Schwartz runs 4 real estate sites. At http://www.brokerforyou.com/real-estate-partner-sign-up.htm can tade links w/these sites. His main site offers web hosting - domain registration & Internet software. http://www.websitetrafficbuilders.com Improve your sites creditability w/Free web site awards: http://www.web-site-award-winning.com
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