The Federal Reserve is concerned about a recession, but doesn't want to cut rates too much because it may stoke the flames of inflation. In a speech last Thursday, Fed Chairman Ben Bernanke signaled the Fed will step in with interest rate cuts as necessary in an effort to prevent a full-blown recession from taking place. It sure looks like the Fed will break off a 50 basis point (1/2%) interest rate cut in its battle to fight a potential recession when the Fed next meets to determine monetary policy on January 30th.

It is important to remember that because Fed rate cuts may add to inflation pressures, home loan rates may actually increase after a cut by the Fed. We have seen this type of chilly response to Fed cuts many times before. Just back in September, the Fed cut by 50 basis points, but home loan rates worsened by 0.25% in just 3 days!

By the way, the best method checking whether refinancing makes sense, is to conduct what is called a "Break Even" analysis. This is done by taking the savings of refinancing divided by the cost which provides a break even point; the time it takes to start saving money. If you are interested in refinancing or partnering with us, please feel free to contact us at any time. With over 46 approved lenders, we will ensure we provide you with the lowest possible rates, and greatest service.