Naples Real Estate http://www.adeltarealty.net Tue, 27 Jul 2010 11:14:15 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Fed Rate Drops .5 Percent http://www.adeltarealty.net/blog/naples-florida-real-estate/fed-rate-drops-5-percent/ http://www.adeltarealty.net/blog/naples-florida-real-estate/fed-rate-drops-5-percent/#comments Wed, 08 Oct 2008 12:52:57 +0000 funds unpredictable narrows slashes interbank london rate libor funds unpredictable narrows slashes interbank london rate libor http://www.adeltarealty.net/blog/real-estate-news/fed-rate-drops-5-percent/ Naples homes for sale.]]>

In a surprise move, the Fed slashes rates by 50 basis points today.

How will this effect interest rates on mortgages?

Federal Reserve cuts in the federal funds rate have an unpredictable impact on long-term mortgage rates. So it’s impossible to know for sure when — or even if — rates will fall as a result of the Fed’s emergency rate cut.

Adjustable rate mortgages (ARM’s) may be more sensitive to Federal Reserve rate decisions, especially if the spread between the federal funds rate and the London Interbank Offered Rate — more commonly known as LIBOR — narrows. There could be an impact due to other countries also dropping their interest rates by their central banks.

Depending on the exact nature of their mortgage, some people with ARMs may see their rate adjust downward the next time the mortgage resets.

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