Reverse Mortgage Guide

The decision by the Federal Reserve to reduce the federal funds rate may well have importance for reverse mortgage borrowers.

The reason? While the Federal Reserve does not directly influence mortgage rates, as it lowers the discount and federal funds rate other loan rates are often impacted.

With a little luck, we may see interest levels for both adjustable and fixed-rate reverse mortgage fail. This is particularly true in the sense that additional rate reductions from the Federal Reserve are likely later this year.

Is this good news? Sure. Lower costs allow reverse mortgage borrowers to cut costs and possibly borrow more.

The problem is that current rate reductions may well be a current benefit and not much more. We don’t know if the Fed’s actions will curb inflation — the real reason the Fed consistently raised rates from 2003 to 2006 and didn’t drop them until now. If it turns out that inflation becomes more significant, then the value of the Fed actions will surely be short-term.

This entry was posted on Sunday, September 23rd, 2007 at 6:08 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.