"When the feds lower the interest rates, if a person is on an ARM, are their rates suppose to drop also? It would be interesting to see if anyone`s did since the rates have changes so much since last year. I know our`s didn`t. I don`t understand what the adjustment of the rate depends on. I thought it would adjust according to the fed rate."
No when the Feds lower interest rates that means money in general to all NEW borrowers will be easier to get lower rates than they could have before the reduction. Although it will not/does not affect existing contracts, if your note is due for a rate hike in the near future it could result in a slightly less aggressive increase.
In general the lower rates may make it less likely the dubious mortgage perpetrators will hike your rates as much as they intended to. But even though they could lower your adjustable rate if they wanted to, they are not going to do it. They don’t have to.
A lower interest rate by the Feds generally jump-starts the economy.. Housing starts will be up, more borrowers can qualify, the stock market loves lower interest rates, as do consumers, as well as both big and small businesses. I don’t think it has a substantial affect on food, clothing, or hardware, but it will increase job opportunities. I am uncertain as to how a reduction in rates by the Feds affects (if at all) a mega driving force in the current economy: ENERGY
~ ~ ~ ~ ~
One of my strengths is that if I don't know for sure, I'll tell you. I am a numbers person par excellence but I am only 90% sure what I just told you is accurate and there may be some angles I left out.
~ ~ ~ ~ ~
Do you mind if I anonymously ask this high-quality question for you in the forum? I'll keep your name off of it. People like Nye, H. Gosh, Dave Mortensen, Jack Wright, Greg Collins (very smart), Joe B, Dee, Mike Dillon, etc and especially William Roper, can give good advice.. So can many others..
Bottom line: A rate reduction by the Feds will not result in a lowering of your current rate but could result in a tiny bit less of an increase in a scheduled adjustable rate mortgage increase in the near future for you. No roll-backs.