Need Help from the Smart Economists

[HummerHippy]

This morning I look at the 30yr fixed mortgage rate from a local credit union: 6.125%. I see the headlines today about some federal interest rate was lowered .5% today yes?
I look again, this evening at the 30 yr fixed mortgage rate at the credit union: 6.375%

What's going on???

[wpage]

Call your credit union...

They posted it wrong

[HummerHippy]

you'd think huh.

[mdoyle]

They may have posted it correctly; individual lender's rates aren't tied directly to the discount rate. Changes in the discount rate will only influence the lender's rate dependant on their volume of business and lending committee policies.

Generally you'll see lower interest rates when the discount rate is reduced, but it's not a given.

[BKLYNH2]

Ordinarily you would see the rate fluctuate in accordance with the fed rate. However as everyone must have heard by now, banks are not lending money very freely at all or at better rates despite the fact that the central bank is all but throwing money at them. I would wait and see. Something is going to have to be done to free up the credit market or else we will experience new levels of being down the sh!tter.

[Frank2005]

The Fed rate is the rate that banks lend to other banks at. It generally does not have much effect on the 30 year fixed mortgage rates. 30 year fixed mortgage rates generally run with the 10 year treasury note yield. The 10 year yield runs inversely to its price. So if the 10 year treasury note raises in value, the yield declines, usually lowering 30 year fixed rates. (I think)