Props again to Adam O. No, this ain’t no shill, just some good info to have.
So, Ben Bernanke and the Fed brought financial aid to the streets last week, lowering the Federal Funds Rate and Discount Rate by 0.50%. In an unprecedented emergency move, central banks across the globe joined in lowering interest rates. Huzzah!
This move follows Washington’s passing of the $700B Rescue Plan. From “Wall St. to Main St.”, a common concern has been heard Washinton:
“We need money… no, let me rephrase that…we need cheap money.”
Rates Could Rise From Here
Home loan rates have benefited from the weakness in the financial markets. Fixed rate mortgages remain very attractive. However, the Fed lowers short term interest rates to shore up financial markets. This could cause home loan rates to rise in the coming weeks and months if confidence returns to the stock markets.
ARM Holders Take Notice!
Anyone that has an Adjustable Rate Mortgage (ARM), take note. The London Interbank Offered Rate (LIBOR) has soared from uncertainty in financial companies…And 6 million home loans in the US are tied to LIBOR which determines the interest rate at the time of adjustment.
So, bottom line, if you know someone with an ARM, let ’em know that potential trouble may be lying ahead, and the time to act is pronto.