Leading Rich

You would think that mortgage rates would fall with the Federal Reserve cutting rates this week, only to see them rise. According to Bankrate.com, mortgage rates are up .17% this week with the 30 year at 6.17% as of December 12, 2007. How can this be, when the Federal Reserve has been cutting rates for the last six months and also infusing capital into the banking system. Contrary to opinion, a Fed Rate Cut does not necessarily represent that all rates will decrease. Since there is still a credit crunch and the housing market in disarray, banks are hesitant to take on risks with the Real Estate market and therefore mortgage rates are staying high.

Definition from the Federal Reserve: The federal funds rate is the rate charged by one depository institution on an overnight sale of immediately available funds.

This is not a rate that the consumer sees, but the cost to banks to borrow from the Federal Reserve. Essentially it breaks down to the banks borrowing money at 4.29% and then lending it to the public at 6.17%. For the time being, mortgage rates are going to stay near the 6% range and it might take some time for rates to come down. According to BankRate.com, there were several factors for the strength in mortgage rates, including competition from the stock market, inflation concerns, and mortgage risk. We need the Federal Reserve to cut rates at least another percent to really make an impact on the mortgage industry. Ben if you are listening “CUT RATES AGAIN!!!!”

Data Source: FederalReserve.gov

If you love your pets, we suggest you get pet insurance as soon as you can. For personal finance, get an unsecured loan and go take a vacation. It’s not hard to find really cheap travel insurance. If you’re a large business and you don’t have business insurance, you better get it before god forbid a crisis occurs. If you’re not able to pay off credit card payments, look into credit card consolidation. This is just lke a bad credit loan through the federal reserve.