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Jaime Said:

Will home mortgage and sales recover when lending rates get down to 3.25 % ?

We Answered:

It will be a long, slow recovery.

Cassandra Said:

Even though the Fed lowered rates multiple times why haven't home mortgage rates gone down accordingly?

We Answered:

I will try and make this short but its a complex question. Mortgage rates are not controlled by the Fed. Usually the Fed at the start makes it worse.

I disagree with the first poster about one thing. Banks dont make up what the rates are. The bond market does. The Fed controls what banks charge eachother. Mortgages are sold on the open market as bonds. No bank is rich enough to hold mortgages, they just service them. You have a loan with wells fargo, that money came from the open market sold as a bond. Almost all mortgages in the US are serviced (meaning wells fargo collects your payment) but the person that supplied the money isnt even a US company. Wells fargo gets your payment and sends it to China, or whoever bought the bond who funded your loan, and collect a fee for doing it. The company or country that provided the money for mortgage back securities determined the rate on an open market. Not the FEDS and definately not the bank.

So its up to companies and even governments what they pay for them. When the Fed dropped rates mortgages went up? Why supply and demand. They pulled their money out of mortgages and went for stocks. Interest rates increased to get more buyers.

The Fed cant do a thing about mortgages. Its an open market. Feds dropped rates 1/2% mortgage rates immediately went up 1/4%.

But the good news is historically it will follow the feds. But its up to businesses that actually buy mortgage backed securities. They can bid anything they want. Normally mortgages will fall but it historically it goes up when the Fed goes down... and follows 1-3 months later. So you will need to be patient. It doesnt always follow the fed. And sometimes they go opposite.

Mortgage backed securities follow the 10 year bond. Here is a 3 month graph. You will see how they changed when the fed lowered their rates. Bonds went up. But its still a good market but you can see the 2 days they lowered the rates on this graph. Mortgage rates went up, not down.

http://finance.yahoo.com/q/bc?s=%5ETNX&t…

Carolyn Said:

Which bank offers the most competitive home mortgage rates for first time home buyers?

We Answered:

This changes every week. Each bank will have a "special". You have to do some homework to decide if it really saves you money or if it just looks good in the advertisement. One week you can get a free appraisal; one week you get 1/4% off the interest rate if you open a checking account (you must leave the account open for 1 year).
Otherwise all the major banks offer the same interest rates..