Mortgage Weekly Update - Last Week in Review
Foster Weeks publishes a weekly mortgage report which is updated every Monday morning. How is this affecting the San Francisco real estate market? Read our weekly and monthly market reports. Although the Fed's moves last week did not affect home mortgage or short term borrowing rates, it did have a calming effect on the market!...many saw Friday morning's surprise action by the Fed as a move that saved the day in terms of the financial markets...at least for now. What was the surprise move exactly? It was actually a doubly good surprise, consisting of two specific actions by the Fed, designed to help ease some of the current fears in the financial markets.
First, a .50% cut to the Discount Rate, taking it from 6.25% down to 5.75%. This is the rate at which the Fed lends money directly to commercial banks, credit unions, savings & loans, and also including large mortgage bankers. Now this is a different rate than the Fed Funds Rate - which is the rate at which banks lend money to other banks, currently at 5.25% - and is the rate generally discussed in terms of cuts or hikes surrounding normally scheduled Fed meetings. Note, the Fed's move to cut the Discount Rate has no impact on mortgage rates or consumer rates like home equity lines of credit. The Discount Rate is generally above the Fed Funds Rate, which does make borrowing money from the Fed a last resort for lending institutions, as they would generally borrow from other banks at a lower rate. However, with the current liquidity situation making that more difficult by the day, the Fed's move will help provide lending institutions more liquidity at more desirable rates in the short term.
Read the entire report here.
- Foster Weeks
posted by SFResidence.com @ 8:09 AM
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