Fed Rate Cuts - How They
Impact Your Money
Short Term Impact
A rate cut is designed to stimulate the economy by making it cheaper to
borrow money. The Feds half point reduction in key short-term rates
will probably immediately fuel a stock market rally which may very well
hurt bond prices and push mortgage rates higher.
Long Term Impact
The Fed's actions will likely spur
consumer confidence and encourage spending, financing debt management
programs as well as major product financing such as car loans and home
loans. While it takes 12 to 18 months before a rate cut impacts the
economy for the better, consumers can see immediate benefits as lenders
seek a competitive edge and begin dropping rates to more attractive levels
to generate business.
In time the prime rate will
drop in percentage levels. When this happens look for rates on some home equity
loans and home equity lines of credit to drop. Rates on some variable-rate
credit cards could drop as well. To research rates perform the
following.
1. Look up rates nationally and by state using the tools below
2. Get most current rates directly from the lender.
3. Compare rates from several lender offers.
A rate cut at the right time can provide a boost of confidence as consumers take advantage
of more attractive fixed financing rates and seek ways to save money over
the long term by refinancing home loans, car and student loans as well as
consolidating credit card debt. The money saved will inevitably lead to
increased spending as the Fall holiday shopping season gets underway.
If you have an adjustable rate loan or credit card anticipate a drop in rates in the weeks following a rate cut. Fixed rates are not affected. However if you opt for a 15 or 30 year fixed rate loan program you're still in for savings of up to thousands of dollars over a rate that's just
.25% higher.
Considering that today's rates are at
historic lows, a less risky approach to getting a good deal on a
rate is to apply for rate quotes at online lending marketplaces now. Have
lenders compete for your business and negotiate your best rate with such
programs as adjustable rates mortgage to take advantage of future rate cuts.. Protect your current or future desired rate with rate re-lock-ins or long term rate locks that allow for rate locks of 30-60 days or more.
See A History of Fed Rate Cuts
Fed Rate Hikes
ARM's
(adjustable-rate mortgages), that
adjusts monthly or every six or 12
months, the rate will likely rise
when the adjustment period
arrives.
Federal Reserve's rate increase
won't affect a fixed-rate mortgage.
There is no increase in monthly
mortgage payments when Fed rates
are adjusted.
Home equity lines of credit, or HELOCs, might adjust upward in the
next one to three payments,
depending on how often the lender
adjusts the rate. HELOC's feature
variable rates that move up and
down with the prime rate. The
prime rate will rise
immediately.
The
overnight rate influences the prime rate. Consumer debt tied into the
prime rate are variable-rate credit cards, car loans and home equity lines
of credit.
How To Shop Low Mortgage Rates
Save up to $800 per month and tens of thousands of dollars
lowering your mortgage rates and refinancing your home.
Home equity loan and home loan refinance tips to reduce
monthly payments, lower mortgage rates, get cash back and save thousands in
loan costs. What could you do with an extra $3000 to $4000 per year.
Home refinancing makes big savings possible.
Now refinancing your home loan has never been easier.
Home equity refinancing can save you hundreds of dollars per month. Many have saved
as much as $800 per month. Even a $200 savings can add up to
significant savings over several months.
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