November 7, 2001 17:56:35 Fed Lowers Short-term Rates... Mortgages By Percy Ihara (808) 479-4087 or email@perc of Mortgage Specialists Fed Rates come down, why not Mortgage Rates? I, like you have watched as the Federal Reserve cut rates again and again. The very day after the recent announcement by Alan Greenspan to lower rates, mortgage applicants all over were calling their loan officer expecting a lower rate. Unfortunately, the average consumer is not aware that mortgage rates are not tied directly to what Alan Greenspan does to the Fed Rate. The very fact, albeit hard to believe, mortgage rates are cibc mortgages fair credit reporting act higher now then back in January when the Fed began cutting rates. It is very difficult to explain to your average consumer that even though the Fed cut their rate by 2.75% there is really no benefit in mortgage rates. The media makes a big deal when Alan Greenspan talks, however, not enough is done to explain how his rate cut affects consumers. The fact remains that the Fed can only control the Discount Rate and the Fed Funds Rate. Both of these rates are short-term rates and donat have much of an impact on long term rates fair credit reporting act fair credit reporting act such as the 30-year mortgage rate. Likewise, many consumers make the common mistake in thinking that the 30 years treasury bonds or the 10-year Treasury notes are directly tied to the mortgage rates. Both of these are government securities that are backed by the U.S. government and donat have a direct effect on mortgages. So what are mortgage rates based on? The answer is mortgage-backed bonds known as Mortgage Backed Securities (MBS). Bonds are issued by two primary funds Fannie Mae and Freddie Mac (MBS) and the trading performance of these bonds will determine the direction of mortgage farm loans fair credit reporting act rates. Fannie and Freddie as mortgage professionals call them are the entities where most of the Mortgage Bankers and Banks sell their mortgage. Commonly called conforming loans is the aboxa in which most of us fit. When you donat fit the box then you would fall into the non-conforming category. The box can be tight at times so donat feel bad if you donat fit in. There are so many guidelines and with todayas changing borrower profiles the industry is seeing growth in the assortment of mortgages available in the marketplace. Percy Ihara, Executive Loan Officer Bus: 521-3833 debt help fair credit reporting act ext. 113