With the recent Fed rate cuts, do you think the interest rate on new home loans will come down and if so, how soon?

hi

according to popular belief ,when the feds "Cut rates" that can be viewed as inflationary, hence you will see "long term" rates rise. But there are many other factors involved in it. It is difficult to say that long term rates come down or not.

Fixed rate mortgage rates are determined by how much in Mortgage Backed Securities is purchased at what coupon rate. The Fed Rate cits and everything else in the world effects the economy and whether or not the economy is doing well or poorly, whether there is inflation pressure or not.

Everything eefcts whether or not investors purchase Mortgage Backed Secutiries, but only MBS coupon rates detemine mortgage rates. When the economy is doing well or recovering there is no incentive for unvestores to buy low yielding fixed rate instruments--MBS. Rates are now about 5.500% and will probably be in 5.25% to 6% range for the forseeable future.

the fed hasn't cut rates in a while. mortgage rates, on the whole, have risen in the past month or so, though not so dramatically as to be considered high.

i can't argue with john's analysis of the situation. we've seen increases in the past week or so due to stock market gains - he hit it.

i said "due to" stock market gains, which may be an overstatement. but it's not that far off - when dow jones goes up, so do mortgage rates, as a general rule.