FED Cut Rates – Good or Bad?

by September 22, 2007 • 0 comments

In a meeting last Tuesday, the FED cut interest rates by a half a point, down to 4.75, but some economists are saying too little too late. In a newsletter I got last week from Finworth Mortgage, it reads that the rate cut is great for the short term loan instruments, but actually bad for 30 year fixed. What happened is bond buyers liked the move the FED made as it applied to the 2 and 3 year Treasuries and bought them up, but they disliked the move as it applied to the 10 year Treasuries. The result: short term fixed rates such as 15 year fixed loans, etc. went down, and long term rates such as the 30 year fixed spiked.The best explanation can only be had by actually reading the newsletter. I can pretend to know what I’m talking about all day, but to get the full effect of this explanation click here to read it.

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