Additionally, rates on savings vehicles such as money market funds, certificates of deposit, and savings accounts have held steady or fallen only very slightly.
James Bianco, president of Bianco Research LLC, a Chicago-based market research firm states that even though the Federal Reserve has lowered rates ¾ of a percentage point since September, the market has only received between 0.25% and 0.50% of that drop. If the situation is looked at from a borrower's or saver's perspective, it illustrates that the market continues to not operate properly.
The vice president of mortgage tracker HSH associates, Keith Gumbinger states that declines in the mortgage rates have fallen behind due to skittish attitudes of institutional investors regarding the risks associated with mortgages and continue to demand higher premiums to hold the loans.
Holders of adjustable rate mortgages that are due to reset at higher rates could benefit from the lower rates. For ARMs that have reset rates that are tied to the one year Treasury, that rate is currently at 6.5%. Prior to the Fed's cuts in rates which began in September, that reset rate might have been at 7.5% or more.
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