Fed Rates vs mortgage rates

Great information provided to me by a friend:

Most consumers think that the Fed rate and the mortgage rates are the same, but they are not. That is why when the Fed cuts the rates & the media makes such a big deal about it, we, the consumer, rarely will notice it in our mortgage rates. The Fed rate is the rate at which banks borrow money; not the rate at which they loan money.

Right now, what the market needs is not another rate cut but a loosening of the mortgage restrictions so that more folks can qualify for a home. But don’t worry…every time the market goes through a correction and banks get scared tightening up their lending criteria they eventually loosen up the purse strings again. It’s a gradual process and not one you’ll particularly notice but trust me, banks need to lend money to make money. So folks with decent credit and a good job who may not have large down payments will be able to get back in the game very soon. The recent legislation to expand the conforming loan amounts to $532k will certainly help entry level buyers here in Massachusetts.

Once first time buyers can buy, move-up clients can sell and the high end will loosen up as well. This is all a very predictable cycle that’s been happening for over fifty years.

It's a good life,
~debi