Your Questions About Mortgage Rates News

George asks…

Can I sue my bank for not lowering my mortgage repayments in line with interest rate drops?

Today the Bank Of England are deciding what to do with interest rates again. From news reports I hear that it may remain unchanged. However, in the last year there have been plenty of interest rate cuts.

What concerns me, is that my mortgage provider is not cutting my mortgage rate by the same amount? Sometimes not at all.

I am hearing more and more complaints about this, and think something should be done to prevent the banks using another way to rip us off.

This is surely unlawful?

admin answers:

What you must do is carefully read your loan agreement. It probably states that your interest rate will adjust at regular intervals. That means that on each specific date, your rate will change based on the index plus your margin, likely rounded-up to the nearest 1/8 or 1/4.

The adjustments will only occur on those dates, and upon those terms. If you feel that your adjustments are incorrect, then you need to contact your lender. If you are still at odds, then you need to contact an attorney.

Good luck!

Mary asks…

How can we lower our mortgage rate?

I’m wondering what are the options to lowering our mortgage rate. We currently have about a 300,000 dollar loan for our house. However, we have them on two different loans; they’re at 10% and 7% interest. I was wondering what steps we can take to lower these rates. With the economy recessing, it’s becoming harder and harder to pay these bills. I have heard in the news that we can have our mortgage rates lowered up to 5%? Please, if there’s anything we can do, please inform us. Thanks for your help.

admin answers:

If your house appraises for $300K you can refinance with a new mortgage at a much lower rate.. Assuming you have good credit.

David asks…

How will the Fed’s rate cut affect my mortgage rate?

I have been pre-approved for a mortgage through my credit union. The loan is a 5-year ARM for 80% of the value, and a 5-year Balloon for 17% of the value, and I am putting 3% down on the house. I am set to close 1 week from today. I have a loan commitment from the lender.

I read in the news today that the FED is considering curring interest rates for the money that banks borrow, (which to my understanding is how they set thier interest rates??) by .25 to .50 %.

If they do cut rates, would that affect a credit union? Should it lower the rate that I am being offered for my home loan? Would I be foolish to ask my lender (credit union) if my rate goes down?

What are your thoughts?


admin answers:

Most likely it won’t. The Fed rate isn’t strongly correlated to mortgage rates.

Mortgages are more strongly correlated to T-bill rates, such as the 1-year T-sec. These go up and down depending upon how much money the govt. Lends and how many people want to buy our bonds. It’s determined more by China and Saudi Arabia than the fed. The reason for the strong correlation is that mortgages ‘compete’ with T-bills for money. Both are long-term, relatively safe places to earn some interest income.


Paul asks…

I heard that Federal lowered mortgage interest rate by 0.5% who are qualified for this benefit?

I heard a news about Federal goverment lowered mortgage rate by 0.5%, is it true? Who is qualified for this benefit?
We get our loan from a mortgage company.

admin answers:

It is not true.

Mortgage interest rates are determined on the open market and not fixed by any agency.

The Fed lowered the funds rate by .5%. That is an interest charged by one bank to another and has some effect on other rates because the cost of funds to the banks are cheaper. But the effect on long term loans like housing loans would be very limited.

It may help the economy maintain some strength and help job growth. But the federal government does not control mortgage rates at all. The Federal Reserve does not control mortgage interest rates at all.

Chris asks…

Interest rate cut and mortgage?

It looks like rates are down to 3.5% according to news papers. But, mortgage rates are still in the upper 5 or lower 6 %. What is the relation between this federal rate and mortgage rate. Also, do you think it is good time for people with great credit to buy a first home?. Is fixed rate the best way to go to lock up a good rate forever?

admin answers:

What fed cut was Over night lending rate, which is the rate institutions use to lend money to each other, however it is a direct control indicator of customer mortgage rate, banks adjust their lower rate to over night lending rate but they compete on giving higher rates to customers.

Bottom line, fed rate is the lower bound on mortgage rate and upper bound is determined by the market competition

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