Fed Rate Cuts ALWAYS Mean Lower Interest Rates? Right?
March 25th, 2008 . by Jon ModeneSince the markets are not working in the normal and expected manner, many believe that the recent Fed rate cut will have the opposite effect . . . and cause mortgage interest rates to rise. The bond markets are actually fearful of lower short term rates because that rate cut is going to fuel inflation.
A couple of weeks ago, the Fed cut the rates that consumers and banks pay and the interest rates on residential real estate actually rose from around 5.75% to 6.5%.
Who would have imagined that?
Rate shopping? Beware this inverse risk/rate behavior.
Waiting to lock? Beware!
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