The Fed cut mortgage rates to their lowest level in 37 years.That’s good news for millions of homeowners coming out of bad mortgages, as well as others just looking to refinance to lower their monthly payments. This mainly affects those with adjustable rate mortgages and home equity lines of credit. These home owners will see their mortgage bills automatically drop during their next billing cycle.
According to Frank Nothaft, Freddie Mac vice president and chief economist, interest rates on 30-year fixed-rate mortgages eased for the eight straight week and set another record low since Freddie Mac’s survey began in 1971. “Real GDP growth fell 0.5 percent in the third quarter of the year, pulled down by the largest drop in consumer spending since the second quarter of 1980. The market consensus calls for an even larger decline in the last three months of the year,” Nothaft reported.
But the National Association of Realtors (NRA) November report shows that the housing market continues to decline. Existing home sales (excluding condominiums and co-ops) fell 8.6% 4 million units. This has left many wondering why this is so since the LIBOR (London InterBank Offered Rate), which is the rate banks charge each other for one-month, three-month, six-month and one-year loans, is also down.