Real Estate in Kansas City North

  Here's the latest Mortgage News from my friend:  Carol Poppe, Vice President Mortgage

Ph 913-652-7302                                  cell 913-707-1153                  

    MORTGAGE NEWS FOR THE WEEK OF 09/17/2007

The long anticipated Fed Rate cut arrived on Tuesday.  The surprise was that the Feds cut the rate .500%, higher than the anticipated .25%.  What does this mean?  Rates on consumer debt, car loans and Home Equity lines will benefit but because 1^st mortgage loan rates are tied more closely to inflation, it is not uncommon to see less of a reaction in them.... Or even an opposite reaction in first mortgage rates.  This is what has happened.  Mortgage rates have been falling over the last two weeks in anticipation of this event.  The announcement on Tuesday ignited a massive rally in U.S. stocks and a move away from lower-risk government bonds.  Stocks enjoyed their largest gain since 2003.  The Feds making money easier to get, tends to feed inflation, which is a killer to the bond market.  The Treasury Bond prices have continued to decline since the announcement.

The Fed cut also hurts the rates of return on investments, which gives foreign investors less incentive to invest in US Securities.  This has sent the dollar lower which makes foreign goods more expensive for us to buy, which also adds to inflation pressures.

An interesting side:  At our monthly meeting yesterday, a rep from one of our 2^nd mortgage investors made a presentation.  As we all know, 2^nd mortgage rates have sky-rocketed.  I asked him if the second mortgage rates were going to ease on the drop of the Fed Funds rate.  He replied NO!!! 

Thanks Carol.... I love your updates!