Floating Mortgage Rates Set to Fall Sharply in 2010

Posted by: Bruce Nussbaum on December 14, 2009

The Bank of America has notified someone I know that their floating rate mortgage will go from 4.50% in 2009 down to 3.125% starting February 2010. That’s a whopping drop of 1.375% and will result in big monthly savings.

I haven’t seen much about this in the financial press but I’m guessing that this magnitude of mortgage rate cut will have a significant impact the US economy, since there are so many floaters out there. That should mean money available to families, to either save or spend. Saving is good, since the federal government needs all the bucks it can borrow next year and it would be nice to cut its dependence on China. Spending is good too, especially on products and services made in America, to boost economic growth and employment.

OK you financial wizards of Wall Street, run the numbers and tell us the macro-economic impact of a cut of 1.375% on US floating rate mortgages next year.

Reader Comments

willroz14

December 14, 2009 4:14 AM

I guess I'm one of the 98, as my modification has been approved, and my credit is not

exactly stellar right now. I would have to believe there is a lot of work being done by

banks to facilitate this, based upon the time it takes on hold to speak with someone. Work

with these http://bit.ly/849fAi to make the process faster!

Abner Gromble

December 17, 2009 3:34 AM

Mr. Nussbaum, you write that "there are so many floaters out there" -- but are there still? Anybody have any figures on the ratio of fixed mortgages to floating mortgages in the United States, and how that ratio has changed in the last three years? A rate drop as steep as the one you describe smacks of desperation, doesn't it?

kyle richard

October 26, 2010 3:12 PM

amarkayel

December 26, 2010 2:17 AM

s an older American you can turn to “reverse” mortgages to seek money to pay off your current mortgage, finance a major home improvement, supplement your retirement income, or to pay for those unexpected health care expenses. These type loans can allow you to convert part of the equity in your homes into cash – without having to sell your homes, move out OR take on any additional monthly debt.
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February 24, 2011 3:18 PM


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