Feb 19, 2009

SPAM EMAIL - Mortgages at refi monster .n et

From: "RefiMonster" - RefiMonster@leafpine.com - Received: from unknown (HELO leafpine.com) ([]);

The Fed just made a cut! Didn't you hear the news? Mortgage rates are going to be rock bottom!!!

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This is one of the biggest misconception made by the general public when the Federal Reserve makes a cut to the Banking rate.

It comes from the media. They portray these cuts as an immediate decrease in mortgage rates.

It's almost always not the case!!! This creates a lot of confusion in the average Americans mind.

These cuts are generally made to reduce inflation.

I bet you're wondering how this impacts you and where these cuts are transparent in your finances?

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You will see it in your day to day spending. Some common examples are when you go to the bank for a personal loan, auto loan, new or existing equity lines and credit cards.

This should help you understand why mortgage rates are not directly impacted by the Federal Reserve cutting the Banking rate.

Let's talk about how mortgage rates can decrease.

It has everything to do with the 10 year Treasury bond and how it is trading on Wall Street.

Interest rates are always low when Treasury bonds are low. All 30, 20, 15, and 10 year fixed rate mortgages are securitized to the bond market.

The lower the bond yield, the better the interest rate.

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This rule will not apply if the Federal Reserve counteracts the low yielding Treasury bonds with cuts in the Federal Banking rate.

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