Feds most likely will drop rates 1/2%-1%

126coupe · 126coupe's Garage

Its possible that the Fed could drop a key rate 1% to 0% tomorrow.
First time since 1954 that the rate could be 0%.
Personally for me this is a good thing. I have fairly sizable commercial loans on RE that are tied to the prime rate.

Does anyone on the board have an opinion on this rate cut?

the · 12-15-2008, 10:29 AM

Won't be long before it is a negative number!

126coupe · 126coupe's Garage

Quote:

Originally Posted by the

Won't be long before it is a negative number!

A negative #? Is this possible?

the · 12-15-2008, 10:42 AM

These days, it seems anything is possible. The lowering of rates has been the life support drug for our dying economy for several years now. But of course that drug is limited. Now that the bag of tricks is almost empty . . . then what?

legion · 12-15-2008, 11:28 AM

We have almost reached (or have already reached) the point when lowering interest rates has no impact. Look at Japan in the 90's--they had a rate of 0% and that couldn't kick-start their economy.

JeremyD · JeremyD's Garage

They won't go to zero, then they won't have anywhere to move.

Jim Richards · 12-15-2008, 11:29 AM

Quote:

Originally Posted by the

. . . then what?

Wal-Mart gift certificates?

turbo6bar · 12-15-2008, 11:33 AM

Quote:

Originally Posted by JeremyD

They won't go to zero, then they won't have anywhere to move.

What you talkin bout, Willis? If they have any balls, they'd drop rates to -4%, so Prime goes to minus 1%. In Soviet America, loan pay you.

The problem isn't liquidity, but solvency. Lower rates do not fix bad debt, particularly as the collateral is falling in value.

sammyg2 · 12-15-2008, 03:38 PM

Just got an e-mail earlier today, our finance guy who we've been working with for years is offering a re-fi for our house at around 5%, no points or closing costs. We're at 5 3/4% now.
No-brainer if there ever was one.

targa911S · 12-15-2008, 04:03 PM

Makes me wish I had a mortgage.

83-911SC cab · 83-911SC cab's Garage

The mortgage company I use to check rates has been showing the rate on a 30 year conventional to bounce from 5% to about 5.5% daily.... I know they say the prime does not affect the Mortgage rates because they are set by traders/ investors somehow?

I find this hard to believe as the Mortgage lenders are borrowing their money from someone and it ain't the guy living next door!!!

I guess this is why I will be working for a long time coming..

Vipergrün · 12-15-2008, 08:05 PM

Quote:

Originally Posted by sammyg2

Just got an e-mail earlier today, our finance guy who we've been working with for years is offering a re-fi for our house at around 5%, no points or closing costs. We're at 5 3/4% now.
No-brainer if there ever was one.

Dang Sammy, pass me his #

I'm also at 5.75 and it might make sense to do a 15 year refi.

Wickd89 · 12-15-2008, 08:11 PM

Quote:

Originally Posted by Vipergrün

Dang Sammy, pass me his #

I'm also at 5.75 and it might make sense to do a 15 year refi.

True. Sammy you are the man!

Can you please email me his number.

Sounds like you have known him a while and you trust him with your $$.

Aurel · Aurel's Garage

So, what does a negative prime rate actually mean? Does anyone get paid an interest for borrowing money?

As far as 30 yr fixed loans go, I would be delighted to refi at 4.5% no closing cost and points from my current 6.625%. Am I dreaming or will it happen soon?

turbo6bar · 12-16-2008, 05:24 AM

Quote:

Originally Posted by Aurel

So, what does a negative prime rate actually mean? Does anyone get paid an interest for borrowing money?

As far as 30 yr fixed loans go, I would be delighted to refi at 4.5% no closing cost and points from my current 6.625%. Am I dreaming or will it happen soon?

Negative prime rate would be the cue to bend over and kiss it goodbye. The chances of that ever happening are so close to zero. If it did, you would know the end is near.

At 6.625%, even 5% would be good news. Go for it.

cantdrv55 · 12-16-2008, 08:50 AM

I'm doing a refi right now. Fixed at 4.875% at 1 point for 30 years. With the savings I'll be seeing, I can almost make double payments and reduce the time to less than 15 years.

legion · 12-16-2008, 08:53 AM

When your only tool is water, and you have a ship on fire, you have to be careful not to sink the boat when putting out the fire.

onewhippedpuppy · 12-16-2008, 09:12 AM

Anybody know what a 20 year fixed is averaging? Mine is at 6%, I'd happily refi if it saved me on my overall interest and monthly payment.

Bill Douglas · 12-16-2008, 09:15 AM

I wish I lived in the US. I'd be buying more property.

Fool you say. Remmember 2008 in 5 or 10 years time. What opportunities we had.

Vintage Racer · Vintage Racer's Garage

Quote:

Originally Posted by Bill Douglas

I wish I lived in the US. I'd be buying more property.

You don't have to live here to buy property.

You can also buy property through a ETF. If you think the returns will be so great going forward 5-10 years, it seems like to me that you should load up now.