Fed rate cut won’t help subprime borrowers
September 25, 2007
So, the fed cut the rate on short term money by .5% to help out the “little guy”. Does it really help? No, not really. Most subprime loans are based on the LIBOR (London Interbank Offered Rate), not the fed rate.
The cut in the fed rate WILL help people with floating rate mortgages that are tied to that rate, such as home equity loans.
Entry Filed under: Bill Bronchick, William Bronchick, bronchick, housing bubble. .
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paulpayscash | September 25, 2007 at 11:49 pm
It also won’t do anything to help subprime borrowers obtain new financing to buy a house. The 80/20 product is all but dead, and now–shock of shocks–you need a credit score higher than the 500s. The rate could be zero and it wouldn’t help these buyers.