Cecelia M.  

1. Lower fed rates do not necessarily mean lower mortgage rates. In fact, mortgage rates often rise following a Fed rate cut.  It is just coincidental that mortgage rates are on a decline now. So, if you currently have an ARM or a higher interest rate fixed rate mortgage, now may be a good time to consult a lender about refinancing.

    The Fed controls the Fed Funds Rate. They DO NOT control the mortgage rate. Although what the Fed does can affect what happens to mortgage rates.

    Disclaimer: Mortgage rates are tied to mortgage bonds. As the price of mortgage bonds go up, rates in turn get lower. When the price goes down, rates go higher.

People basically have two options when investing their money. They can either put it in stocks or bonds. Stocks are risky than bonds and thus reward their investors with a higher yield. Bonds on the other hand are a safer investment and yield is lower.

    When there is positive news about the economy such as low unemployment and high capital goods orders, people will pull their money out of bonds and put it into stocks on the hopes of it earning more money.  On the other hand, if there is negative news people will pull their money out so stocks and put it into the safer investment of bonds.

2. How does this impact individuals with current credit challenges? 

Due to current market conditions, and all of the losses that we are seeing across industries, but most importantly in the banking industry, although mortgage rates are lowering to stimulate the economy, guidelines are tightening.  It is extremely important that we begin to take a vested interest in what our personal credit histories look like.  If you own a business, it is time to begin building and maintaining business credit.