When the Fed lowers interest rates, why not lower the rate attached to 30 yr. mortgages?
Answers:1 | LastUpdateAt:2012-11-05 01:56:03
Question- Help me please
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Instead of lowering rates linked to short-term loans to banks lend to each other , why not drop rate mortgages tied to 30 yr ? This would help the economy by allowing those with fixed rates to refinance and put more money into the economy and help those affected by the sub -prime ARMS .
Answer1sydneeAnswered at 2012-11-05 01:55:47
Fed does NOT control long term rates. (mortgage) Long term rates are decided in the bond market and usually based on the 10 year treasury note. The drop in FED rates usually helps those with ARMS as their rate IS tied to prime and the Federal Funds Rate.
AS for putting money back in the economy..... refinancing is expensive. So essentially you will only makes banks richer (not that I as a banker am complaining)
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Question:When the Fed lowers interest rates, why not lower the rate attached to 30 yr. mortgages?
