Archive for August, 2011

“Since we purchased our first home we have worked with at least six different mortgage companies. City Creek Mortgage has been head and shoulders above any other mortgage company we have tried to work with.

Each mortgage company we have interacted with has promised that they would stay in contact with us to keep us informed with where our loan is at in the process. City Creek was the only company to actually stay in contact with us and they spent the time to fully explain what they have done and what to expect next. When there was a delay or change in the process we were immediately contacted. Each email and letter sent to us was personal and specific to our needs. It is very evident that the team at City Creek Mortgage works hard to meet the needs of their clients and act in a very professional manner.

I have felt so comfortable with my experience that I am referring them to my friends and family.”

- Adam Bowers

The Federal Reserve recently announced that it intended to keep “interest rates” low through at least mid-2013. This unprecedented statement shocked the markets and helped drive mortgage rates down to match historic lows. As investors digested this information, many concluded the Fed is essentially stating that they believe our economic growth will remain stagnant for some time. Although the markets appreciated the transparency of the Fed’s statement and assurance that lending rates will remain low, it was a sharp contrast to prior predictions that our economy would be at a healthy growth rate by the end of 2011. The acknowledgement that our economic recovery has been “significantly slower” in the first half of 2011 than previously expected was more in line with what many on “Main Street” have been saying all along.

How Will this Decision Impact Mortgage Rates?

There are two interest rates that are controlled by the Federal Reserve – the Fed Funds Rate (a lending rate at which banks with deposits at the Federal Reserve lend money to other banks overnight) and the Discount Rate (the interest rate that an eligible depository institution is charged to borrow short-term funds directly from a Federal Reserve Bank). Both of these are very different from mortgage rates. A mortgage rate can be in effect for 30 years while a rate set by the Fed can change from one day to another. Therefore, this recent statement by the Fed does not guarantee that mortgage rates will stay in current ranges until mid-2013, only that it is likely short term rates will remain at current levels for the next two years (home equity rates, car loan rates, credit card rates, etc.).

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