Fed cuts federal fund rate .5% (half percent)

[Gibson486]

Originally posted by: ducci

Originally posted by: Gibson486

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

that's cool, but I want to know if it will have an effect on conslidation.

I'm intrigued about this as well. I already have a consolidated federal student loan - I wonder if you can refinance this like you would a mortgage - assuming the rates go down?

you can't reconsolidate. I am holding out to see what happens.

 

[Engineer]

Originally posted by: GTaudiophile
Yay for a worthless dollar!

Time to start buying Pesos. I can't afford ?uros.

LOL, the Mexican Pesos has performed about as bad (if not worse) than the US dollar.

To the OP: Inflation, the hidden tax that keeps on giving.

 

[LegendKiller]

Originally posted by: Linflas

Originally posted by: LegendKiller

Originally posted by: Linflas
I think the one they cut today affects short term rates like credit cards, HELC's etc. The one they cut last week was the one that affects long term rates like mortgage interest.

CC's aren't even touched by this. If you look at CC portfolio yields they are actually going *up*, not down.

HEL/OC's are only affected by the availability of funds.

I'm not an economist, I'm just repeating what was in the CNN article linked in the OP and what I heard on the financial programs last week.

NEW YORK (CNNMoney.com) -- The Federal Reserve cut a key short-term interest rate by a half-percentage point Wednesday, its second significant cut in just over a week, as the central bank tries to combat the growing risk of a U.S. recession.

The federal funds rate, an overnight bank lending rate that affects how much interest consumers pay on credit cards, home equity lines of credit and auto loans, was cut to 3.0% from 3.5%. The rate had stood at 5.5% only four months ago.

Journalists aren't economists either. They don't understand jack shit about what's going on in the financial markets.

 

[Eeezee]

Originally posted by: LegendKiller

Originally posted by: Linflas

Originally posted by: LegendKiller

Originally posted by: Linflas
I think the one they cut today affects short term rates like credit cards, HELC's etc. The one they cut last week was the one that affects long term rates like mortgage interest.

CC's aren't even touched by this. If you look at CC portfolio yields they are actually going *up*, not down.

HEL/OC's are only affected by the availability of funds.

I'm not an economist, I'm just repeating what was in the CNN article linked in the OP and what I heard on the financial programs last week.

NEW YORK (CNNMoney.com) -- The Federal Reserve cut a key short-term interest rate by a half-percentage point Wednesday, its second significant cut in just over a week, as the central bank tries to combat the growing risk of a U.S. recession.

The federal funds rate, an overnight bank lending rate that affects how much interest consumers pay on credit cards, home equity lines of credit and auto loans, was cut to 3.0% from 3.5%. The rate had stood at 5.5% only four months ago.

Journalists aren't economists either. They don't understand jack shit about what's going on in the financial markets.

A journalist who only covers the economy probably knows a fair deal about the subject.

 

[Ns1]

Originally posted by: Gibson486

Originally posted by: ducci

Originally posted by: Gibson486

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

that's cool, but I want to know if it will have an effect on conslidation.

I'm intrigued about this as well. I already have a consolidated federal student loan - I wonder if you can refinance this like you would a mortgage - assuming the rates go down?

you can't reconsolidate. I am holding out to see what happens.

This has no affect on your stafford or similar loans. The rates are set well in advance. If you consolidate I'm pretty sure it's the average of your outstanding interests rates, rounded up to the nearest quarter.

This will ONLY affect those unlucky enough to have variable interest rate loans, mostly from private lenders (like me).

 

[LegendKiller]

Originally posted by: Eeezee

A journalist who only covers the economy probably knows a fair deal about the subject.

That's what you'd think. Reality, unfortunately, is much different.

If they knew what the hell they were talking about they'd say that despite having a lower base rate, risk spreads are significantly wider. So, overall, consumer credit prices are either flat, or have increased. If you looked at credit card portfolios, as I do, then you'd know this.

I knew more in my first half of b-school than a journalist covering the economy knows, and that was 5 years ago when I didn't even work for a bank.

 

[Gooberlx2]

Originally posted by: Codewiz

Originally posted by: txrandom
I'm kind of nub when it comes to finance, but I think it should make your house a lot cheaper. Instead of paying 5% interest, you are only paying 4.5%.

This rate is NOT directly tied to mortgage rates. Will it have an effect? At this point I doubt it but it very well could.

There's a Credit Union across the street from my work which is advertising home loans at prime - 0.5%. Unless they've dropped that promo a while ago and haven't updated their window paint, it's definitely affecting them.

I wish I was in a position to be house hunting just because of these rates.

Edit: Actually I went outside and looked again, the windows ad says Home Equity...boo. Still though, good rate for anyone who wants to make some renovations.

 

[Special K]

Originally posted by: Ns1

Originally posted by: Gibson486

Originally posted by: ducci

Originally posted by: Gibson486

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

that's cool, but I want to know if it will have an effect on conslidation.

I'm intrigued about this as well. I already have a consolidated federal student loan - I wonder if you can refinance this like you would a mortgage - assuming the rates go down?

you can't reconsolidate. I am holding out to see what happens.

This has no affect on your stafford or similar loans. The rates are set well in advance. If you consolidate I'm pretty sure it's the average of your outstanding interests rates, rounded up to the nearest quarter.

This will ONLY affect those unlucky enough to have variable interest rate loans, mostly from private lenders (like me).

Stafford Loans taken out before July 2006 are based on the 91-day TBill rate and are readjusted every July 1st. While this rate cut may not directly affect your rates, if this trend continues, then the stafford loans taken out before July 2006 will adjust to a lower rate this July.

I was looking at a historical graph of 91-day TBill yields and while they are not directly tied to the prime rate, there seems to be a pretty strong relationship between the two.

 

[Ns1]

Originally posted by: Special K

Originally posted by: Ns1

Originally posted by: Gibson486

Originally posted by: ducci

Originally posted by: Gibson486

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

that's cool, but I want to know if it will have an effect on conslidation.

I'm intrigued about this as well. I already have a consolidated federal student loan - I wonder if you can refinance this like you would a mortgage - assuming the rates go down?

you can't reconsolidate. I am holding out to see what happens.

This has no affect on your stafford or similar loans. The rates are set well in advance. If you consolidate I'm pretty sure it's the average of your outstanding interests rates, rounded up to the nearest quarter.

This will ONLY affect those unlucky enough to have variable interest rate loans, mostly from private lenders (like me).

Stafford Loans taken out before July 2006 are based on the 91-day TBill rate and are readjusted every July 1st. While this rate cut may not directly affect your rates, if this trend continues, then the stafford loans taken out before July 2006 will adjust to a lower rate this July.

I was looking at a historical graph of 91-day TBill yields and while they are not directly tied to the prime rate, there seems to be a pretty strong relationship between the two.

As an addendum:

Text

 

[gotsmack]

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

I was under the impression that federal student loans that are variable are set once a year in July. You then pay the same rate until next July.

 

[Fritzo]

Woot! Lower house payment!

Unwoot- Lower savings account interest

 

[Fritzo]

Originally posted by: LegendKiller

Originally posted by: Linflas
I think the one they cut today affects short term rates like credit cards, HELC's etc. The one they cut last week was the one that affects long term rates like mortgage interest.

CC's aren't even touched by this. If you look at CC portfolio yields they are actually going *up*, not down.

HEL/OC's are only affected by the availability of funds.

My rate went down to 9.13% in an email I was sent from Schwab because of the drop...'splain that!

 

[Ns1]

Originally posted by: gotsmack

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

I was under the impression that federal student loans that are variable are set once a year in July. You then pay the same rate until next July.

See my link above your post

 

[Svnla]

Originally posted by: Fritzo

.......Unwoot- Lower savings account interest

LOL, don't feel bad. You are not alone. I am in the same boat. Now it will be hard to find any savings/CD for 4% APY or higher.

 

[IGBT]

..never really helps. devaluates the dollar and increases personal debt that too many can't afford at any rate.

 

[Caecus Veritas]

i think there's some general misunderstanding. Feds cutting the rate is on the overnight lending rate for financial institutions.

this will only DIRECTLY affect your loan interest rate IF you have a loan that is tied to an Index DIRECTLY tied to the fed rate.

the one most commonly known index is the Wall Street Journal Prime, which is tied with the fed rate. WJSP will move up/down on a 1:1 ratio with the fed fund rate.

so, if you have a H/E LOC with a variable interest rate based on the WJSP, your payment will change accordingly (of course, the lender may have rules on the adjustment periods). however, other mortgages that may be tied to, say the SWAP rate, it will not be affected by this interest cut directly.

 

[aplefka]

Originally posted by: IGBT
..never really helps. devaluates the dollar and increases personal debt that too many can't afford at any rate.

:laugh:

Sorry, I just thought that was one of the coolest made up words ever.

Seriously though, wtf is going on. 1.25% in less than two weeks?

 

[AnonymouseUser]

Originally posted by: aplefka

Originally posted by: IGBT
..never really helps. devaluates the dollar and increases personal debt that too many can't afford at any rate.

:laugh:

Sorry, I just thought that was one of the coolest made up words ever.

Seriously though, wtf is going on. 1.25% in less than two weeks?

It means the economy is really and truly fucked.

Hopefully they'll stop this rate-cut bullshit soon, and focus on the causes instead of the symptoms.

 

[Deeko]

Originally posted by: gotsmack

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

I was under the impression that federal student loans that are variable are set once a year in July. You then pay the same rate until next July.

This is a private loan through citibank. My federal consolidation loan is chillin at the same rate.

 

[Special K]

Originally posted by: Deeko

Originally posted by: gotsmack

Originally posted by: Deeko
I don't know if it's from the fed rate cuts or what, but the interest rate on my variable rate student loans has dropped 1.5% and saved me a decent amount per month.

I was under the impression that federal student loans that are variable are set once a year in July. You then pay the same rate until next July.

This is a private loan through citibank. My federal consolidation loan is chillin at the same rate.

Keep in mind that your rate probably doesn't reset instantaneously. You'll have to read the terms of the loan, but I think all private Citibank loans reset once per quarter. The other catch is that the interest rate they reset to is based on what interest rates are 30-45 days BEFORE the scheduled reset date.

So if your loan is due to reset on April 1st, any activity in the rates that occurs after March 1st will probably not be reflected in the rate cut on April 1st.

This is how my loan works anyway, and the CSRs I have spoken to told me that pretty much all of their private loans work that way.

 

[Turin39789]

bernanke is daft

 

[Deeko]

Interesting. My rate still dropped this month - so with all the rate cuts since then, chances are, it will drop again next quarter? I'm all for that.

 

[Special K]

Originally posted by: Deeko
Interesting. My rate still dropped this month - so with all the rate cuts since then, chances are, it will drop again next quarter? I'm all for that.

Yeah - mine reset at the beginning of January, April, July, and October. It works for you if rates are dropping, but works against you if rates are rising.

 

[aplefka]

Originally posted by: AnonymouseUser

Originally posted by: aplefka

Originally posted by: IGBT
..never really helps. devaluates the dollar and increases personal debt that too many can't afford at any rate.

:laugh:

Sorry, I just thought that was one of the coolest made up words ever.

Seriously though, wtf is going on. 1.25% in less than two weeks?

It means the economy is really and truly fucked.

Hopefully they'll stop this rate-cut bullshit soon, and focus on the causes instead of the symptoms.

Without getting too political, I don't get how some people could deny that we have been in a recession for a while.

 

[Special K]

Originally posted by: aplefka

Originally posted by: AnonymouseUser

Originally posted by: aplefka

Originally posted by: IGBT
..never really helps. devaluates the dollar and increases personal debt that too many can't afford at any rate.

:laugh:

Sorry, I just thought that was one of the coolest made up words ever.

Seriously though, wtf is going on. 1.25% in less than two weeks?

It means the economy is really and truly fucked.

Hopefully they'll stop this rate-cut bullshit soon, and focus on the causes instead of the symptoms.

Without getting too political, I don't get how some people could deny that we have been in a recession for a while.

Don't you need two consecutive quarters of a shrinking GDP to officially be in a recession? Given that the 4th quarter of 2007 still saw positive growth, it seems we would not be able to say the country is in a recession until July at the earliest.