Impact of mortgage rates

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Submitted by gdcox on July 23, 2008 - 5:00am

GSE backed fixed rates are at their worst level , a high 4.5% points plus above Fed Funds. Is this a major downer or can adjustable rate mortgages relieve this new strain?

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Comparison to Fed funds rate,
Submitted by FormerSanDiegan on July 23, 2008 - 8:23am.

Comparison to Fed funds rate, while interesting, is not all that important. Compared to the current rate of inflation (4%) current rates at 6.5-7% are still lower now than a few years ago when they were at 5.5% (and then-inflation at 2%).
Real interest rates are currently pretty low.

Adjustable rate mortgage do not offer enough of a break on interest rate to account for the risk of rising rates 1-5 years out.