How does the federal interest rate would affect the interest rate of a 30yrs fixed mortgage?

im planning to buy a house and it would take 6 months to finish building it , i heard that the Fed might increase interest rate to combat inflation, would this mean that the interest rate on the time i would closed the house would also increase?|||Undoubtedly you've heard today the FED has cut down the prime-rate by an additional quarter of a percentage point ( that's the interest rate banks charge to their best customers plus some administrative fees that vary among banks).





So the interest cost is on the slide side; I don't think you'd have to worry about an increase by the time your prospect house gets completed. And, with efforts to revive the economy, I doubt if the prime ( that what you should be watching cause that's what your bank is watching too!) would go up significantly before early 2009.





Go ahead lock in the fixed-rate mortgage. If interest cost does not go down any further ( probably another one half of a percentage point, before they give out money outright free) it would stay at the current rate almost assuredly until we have a new guy in the white house. This is the time to buy!....stay fixed and negotiate earnestly. Bien Venu!!!|||Not if you lock your rate. However, most banks won't lock a rate on a construction perm loan until you are closer to completion, typically 60 days or less. The reason for that is, you can't close on your perm mortgage until the house is complete and you receive a certificate of occupancy. Six months out, there is no guarantee you will close on X date. Within 60 days, however, there is more leeway for the closing date to change.|||Your interest rate will go up and down (fairly slightly, but enough to make an impact over 30 years) until you lock in on your rate. Since you have new construction you'll probably have to wait until the project gets closer to completion to lock in your rate. The bank will usually let you know when you have the option. The only downside when you lock in is that if the interest rates decrease then yours won't.|||Mortgage interest rates are not tied to the Fed rate but to the LIBOR|||Yes, if the Fed feels there is inflation, the 30-year will likely rise as well. As others have mentioned, it's not possible to lock in a rate for an extended period of time, only 30-90 days. But that comes with a cost anyways, and rates aren't expected to rise much this years, perhaps just .25-.50 percent, if that.





I would concern yourself more with getting your credit score, income, assets, and other documentation organized, as these will affect your interest rate much more.