How come adjustable mortgage interest rates don't stir down when federal interest rates are at adjectives time low 1%?
Cos the fat cats who adjust the rates for the rich guys want the poor suckers to pay more;
Adjustable mortgages are tied to an index rate that reflect the cost of money to the lender. The index rate used in the industry is not the federal funds rate, but rather any the LIBOR (london interbank lending rate) or in the weak days the 7th district cost of funds. A mortage loan is usually x number of points above the index rate. This allows the lender to offer a lower rate most of the time than they could if they had to guarantee a fixed rate. Every once within a while you'll see fixed rates lower than variable rates. This is unusual, and generally mode that anyone who can get a fixed rate will take that concord, even if they only plan to keep the mortgage for a few years. But underneath normal circumstances, an adjustable rate mortgage is cheaper than a fixed rate if you only plan to hold the mortgage for a few years.
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Adjustable mortgages are tied to an index rate that reflect the cost of money to the lender. The index rate used in the industry is not the federal funds rate, but rather any the LIBOR (london interbank lending rate) or in the weak days the 7th district cost of funds. A mortage loan is usually x number of points above the index rate. This allows the lender to offer a lower rate most of the time than they could if they had to guarantee a fixed rate. Every once within a while you'll see fixed rates lower than variable rates. This is unusual, and generally mode that anyone who can get a fixed rate will take that concord, even if they only plan to keep the mortgage for a few years. But underneath normal circumstances, an adjustable rate mortgage is cheaper than a fixed rate if you only plan to hold the mortgage for a few years.
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