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Posted: 1/22/2008 5:05:01 AM EDT
[#1]
Trying to head off the blood flow from Black Tuesday?
It will be interesting to see how low the market goes. Oil is down to $87. |
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Posted: 1/22/2008 5:07:37 AM EDT
[#2]
Quite a bit lower if they keep this up. Yikes! I won't be making any foreign travel plans anytime soon. |
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Posted: 1/22/2008 5:20:56 AM EDT
[#3]
You *DO* understand that changes in the federal funds (overnight) rate do not necessarily affect mortgage rates at all - right? |
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Posted: 1/22/2008 5:22:20 AM EDT
[#4]
That would be a good idea. Though I'm sure the Middle East is nice this time of year. |
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Posted: 1/22/2008 5:22:48 AM EDT
[#5]
He didn't mention mortgages, just the value of the dollar. This move will most certainly cheapen the dollar. |
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Posted: 1/22/2008 5:23:46 AM EDT
[#6]
overnight lending rates <> mortgage interest rates
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Posted: 1/22/2008 5:25:00 AM EDT
[#7]
But it is a key interest rate. Lowering it makes dollars cheaper. Period. |
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Posted: 1/22/2008 5:26:12 AM EDT
[#8]
Great. We're going to Italy for a month in March. I'm going to start telling the relatives that it's cheaper for us to fly them to America, than it is for us to go there. 
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Posted: 1/22/2008 5:28:21 AM EDT
[#9]
Read the thread title. So what is the reference to "refinancing" related to if not mortgages?
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Posted: 1/22/2008 5:53:18 AM EDT
[#10]
Correct, I know there's not a direct correlation, but there does seem to be a trickle effect from it (at least from what I can remember from the last few times they've changed the overnight lending rate).
Still makes the dollar cheaper, though, as it's down another cent to 1.4563 against the Euro the last I checked. |
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Posted: 1/22/2008 5:56:06 AM EDT
[#11]
Touche. But, even though the overnight rate doesn't have a direct effect on mortgage rates, cheaper dollars overall do. The lower Fed funds rate will have trickle down effect on all interest rates. |
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Posted: 1/22/2008 6:02:59 AM EDT
[#12]
I'm feverishly investing in the Amero and Ron Paul dollars.
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Posted: 1/22/2008 6:04:54 AM EDT
[#13]
most banks lowered prime in response
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Posted: 1/22/2008 6:06:55 AM EDT
[#14]
Just had a teleconference about this with my boss and a few other guys who own ALOT of commerical real estate in this country.
A whole bunch of us in commercial real estate are about to take out ALOT of loans and do ALOT of deals we weren't gonna do yesterday. There can be alot of positive fallout from this. Hey, we're doing our part!  |
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Posted: 1/22/2008 6:09:14 AM EDT
[#15]
I hope so - but I have followed Fed cuts to the overnight rate in the past and have found either very little direct effect - or a fairly delayed efect. With the banking industry taking it on the chin right now and home loan/refi qualification standards tightening considerably - I think it will be interesting to see what (if any) effect this has on mortgage rates in the next month. |
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Posted: 1/22/2008 6:09:37 AM EDT
[#16]
most of our loans (from banks that is!) are X points over the fed. the fed directly affects mortgage rates. |
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Posted: 1/22/2008 6:58:02 AM EDT
[#17]
Keep in mind that today's action afected the overnight rate and the discount rate - not the prime rate which affect home equity loans - or the COFI which affects ARM mortgage rates. Mortgages are not tied to the Fed funds rate, but tend to track the yields on various U.S. Treasurys. The longer the term of the fixed rate - the more insulated it will be from rate changes. ARMs with 3 or 6 month indexes will respond to rate changes more quickly. |
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Posted: 1/22/2008 7:03:35 AM EDT
[#18]
Any connection to auto loan rates? I hope not, since I just bought two new cars yesterday.
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Posted: 1/22/2008 7:04:35 AM EDT
[#19]
Submitted the streamline refi packet today.
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Posted: 1/22/2008 7:12:37 AM EDT
[#20]
Auto loan rate follow the Prime rate - which was not (directly) addressed in today's action. |
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Posted: 1/22/2008 7:15:26 AM EDT
[#21]
Thanks. I financed through USAA, and I asked during the application if they were going to drop with the Fed. The USAA rep said they will go down for mortgage and home equity, but not for auto loans. Just double checking. |
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Posted: 1/22/2008 7:25:03 AM EDT
[#22]
Thank you! You get it. I wish everyone did. This is the part of the economic equation that most ARFCOMers don't understand. If these is a loser, there is also a winner. If 1000 homes get foreclosed on, then 1000 investors snap those homes up and either flip them of rent them. Those same 1000 people who lost their homes, are going to have to live somewhere and pay rent somewhere. It's not like those assets just disappear. Certainly they may be worth less than what the original owner THOUGHT they were worth.....but that wasn't the REAL value anyway. |
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Posted: 1/22/2008 7:30:57 AM EDT
[#23]
Honestly, one of my best friends is the President of one of the banks I use.
He is concerned because of the low interest rates. He thinks that prime should be about 8%. His reasoning is at 8% businesses aren't getting killed on rates to borrow money and investors are getting a decent return on their cash on hand. Makes sense. I several loans below prime right now. It is very competitive for loans among banks around here. |
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Posted: 1/22/2008 7:34:55 AM EDT
[#24]
Actually I think it might have been, the prime that is.
news.yahoo.com/s/ap/fed_interest_rates;_ylt=AjHWgGGovrsjNVq9YbFgsWxv24cA ETA: edit for correction |
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Posted: 1/22/2008 7:37:28 AM EDT
[#25]
And the rich get richer!  Kidding. Sort of.
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Posted: 1/22/2008 7:41:06 AM EDT
[#26]
He's concerned for his bank, not the health of the nation. TXL |
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Posted: 1/22/2008 7:43:19 AM EDT
[#27]
No he isn't. That comment was from his experience from his lifetime in the banking industry. It also wasn't made in his office. It was made around the campfire while drinking beer at my hunting camp. |
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Posted: 1/22/2008 7:45:54 AM EDT
[#28]
The Fed only controls two rates - the Fed funds rate and the Discount rate. The Fed does not set the Prime rate. |
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Posted: 1/22/2008 7:50:19 AM EDT
[#29]
But dosen't the discount rate usually have a direct effect on the bank's prime lending rate? Asking because I didn't know that they didn't control the prime as well. I learn something everyday. |
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Posted: 1/22/2008 7:54:21 AM EDT
[#30]
It's a de facto thing.... 
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Posted: 1/22/2008 8:41:06 AM EDT
[#31]
Huh? The one does not necessarily follow the other. You're saying that there is no time at which inventory and time-on-market increase, and the past two years have clearly demonstrated that that is not at all the case. Someone will eventually buy those homes... when the price is right. For an awful lot of those houses, it isn't. |
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Posted: 1/22/2008 8:55:45 AM EDT
[#32]
The discount rate can and does influence the prime rate - but they are not mechanically tied. The prime rate is defined as: "The base rate on corporate loans posted by at least 75% of the nation's 30 largest banks." It is not really "set" by any one entity - but rather is documented by the Wall Street Journal which tracks what the largest banks re doing. Thus it lags actual rates being offered by commercial banks - rather than acting as a linchpin. Instead of leading he market - it reflects what the largest banks are actually doing. |
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Posted: 1/22/2008 10:48:52 AM EDT
[#33]
For every loser there is a winner, which was my point and your post proves it. There is an ass for every seat.. |
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