Federal Rate Cuts & the Real Estate Market

What Do They Mean For You?
With the Federal Reserve cutting short-term interest rates substantially within the last three months in response to the weakening housing market, it was good news for some consumers and not-so-good news for others.

Those holding home equity loans, credit cards, and car loans got the good news—the promise of lower rates on the way. But some mortgage loan holders whose loans are not tied to a U.S. banks’ prime rate could see little relief.

Credit Cards
Many credit card customers will find extra money in their pockets, as 85 percent of all credit cards carry variable rates¹.

Auto Loans
More than half of all new-car loans are already offered at reduced rates due to manufacturer incentives¹, so don’t look for big savings there. But those purchasing used cars, and financing those purchases from banks and credit unions, are sure to find that getting a loan is cheaper than before because of decreasing loan rates.

Student Loans
If you have variable-rate student loans tied to the prime rate, you’ll probably see your rates adjust faster than those tied to the London Interbank Offered Rate, or Libor.

Homeowners
Borrowers holding loans tied to a U.S. banks’ prime rate should see immediate benefits, because many banks, including Wachovia, have reduced their prime rate pursuant to the recent federal rate cuts. If you are holding a home equity line of credit tied to a bank’s prime rate, you should already be experiencing savings in your monthly statements.

Homeowners holding an adjustable rate mortgage tied to the Libor, may, unfortunately, not see much relief. To determine which index your mortgage is tied to, check your loan documents or contact a Wachovia mortgage specialist.

Interested in discussing your specific mortgage situation? Our mortgage specialists can help, free of charge. To speak with a Wachovia Mortgage Consultant about a new or existing loan, please call us toll free: (888) 567-1506, Monday through Friday, 8:00 am to 11:00 pm ET, Saturday, 9:00 am to 9:00 pm ET.