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Fed Rate Cut Effect On Long Term Mortgage Rates
October 8th, 2008 10:57 PM
Fed Rate Cut Pushes Mortgage Rates Up

mortgage rates

SAN JOSE (KCBS/AP)  -- Interest rates on 30-year, fixed mortgages actually rose after the Federal Reserve cut a key interest rate by a half point on Wednesday.

In a rare coordinated move, the Fed and other major central banks around the world slashed interest rates simultaneously to prevent a mushrooming financial crisis from becoming a global economic meltdown.

Listen  KCBS' Matt Bigler reports

The Fed reduced its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England cut its rate by half a point to 4.5 percent and the European Central Bank sliced its rate by half a point to 3.75 percent.

The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions.

The decision sent Wall Street on a roller coaster ride. The major indexes moved in and out of positive territory, with the Dow Jones industrials at times falling more than 200 points or rising more than 100.

Overseas markets tumbled on worries that the move wouldn't immediately help ease the pain from the financial crisis.

Some analysts were skeptical that the coordinated rate reductions would do much to turn things around. Mortgage brokers told KCBS reporter Matt Bigler they saw mortgage rates stay the same, or in some cases climb.

The rates are still hovering around an historic low of 6.5 percent, making the market an ideal place for buyers with sterling credit and a down payment of at least 10 percent.

(jro)


(Copyright 2008, KCBS. All Rights Reserved. The Associated Press contributed to this report.)

Posted in:General
Posted by Narbik Karamian on October 8th, 2008 10:57 PMPost a Comment

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