Industry NewsMortgage

Fed’s interest-rate cuts will benefit ARM, HELOC borrowers

Effect on long-term rates remains to be seen
Published on Jan 22, 2008

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by CareyBot

The unscheduled and dramatic cut in short-term interest rates announced today by the Federal Reserve will provide immediate relief for borrowers with home-equity loans or facing interest-rate resets, mortgage market experts say.

But long-term rates -- which were at 2 1/2-year lows before today's 75-basis-point reduction in the discount rate and the target for the federal funds overnight rate -- could move in the other direction if bond market investors get nervous about inflation.