since the fed is on a rate cutting binge, many mortgage applicants have been calling their mortgage representative and expecting a lower interest rate. In fact, many mortgage brokers advertise when the fed cut rates expecting consumers reaction to think that this means mortgage rates are following suit. Others waiting to refinance are puzzled why mortgage rates have not moved lower in the recent rate cuts.

This can be difficult for consumers to understand after watching a 2 1/4 reduction by the fed and seeing very little benefit with mortgage rates. So the question becomes, is a fed rate cut good news for mortgages?

The facts may surprise you. The fed only controls the discount rate and the fed funds rate. This is very different from mortgage rates. A mortgage rate can be in effect for 30 years when the rates set by the fed can really change from day to day. There really isn’t any real relationship between the fed rate and mortgage rate.

In 2001, the fed cut the rates 11 times which resulted in 4.75% reduction in short term interest rates. That took the fed funds rate from 6% down to 1.75%. Mortgage rates actually moved higher during this time. Why, because inflation, the arch enemy of bonds, actually rose.

You’ll notice longer term interest rates, like those on a fixed 30 year home loan, always tend to be higher than short term rates. This is due to the inflation premiums and liquidity factors connected to longer term securities. The trends show that when the fed cuts rates, the impact on mortgage bonds interest rate moves in the opposite direction.

When it comes to cars, leases are ever more popular. The reason why? Well thats no mystery. Thats the only way many people can afford the monthly payments. But which method is the best way to keep more of your money in your pocket?

Lets find out with a simple example. A new car with a sticker price of $27,000. First, lets look at buying. Financing the entire $27,000 at 6.9% interest and you’re payments will be about $821 a month. Times that by 36 months and you’ll pay a total of about $29,556. But after 3 years, you still have a car worth $14,556, so your actual cost is $15,500.

Now look at a typical lease. You put a $1000 down and your total might be $485 a month on a 3 year lease. Times that by 36 months and you’ve paid out $18,460. This is about $3000 more than buying. Now even if you earn interest on the money you’re saving on those lower monthly lease payments, buying is still going to win. The longer you keep you car, the more sense buying usually makes. Using 5 years instead of 3 for example, you still come out ahead even more.

Bottom line, while there are factors that could make a lease a better deal, generally you’ll keep a little more money in your pocket buy buying rather than leasing.

Now since there are differences in both cars and deals, you really need to do the math yourself. But don’t worry if the numbers make your eyes glaze over. There are tons of free calculators online that will help you decide.

Credit card delinquencies the highest its been in two decades. Congress is right now considering a credit card holders bill of rights to try to limit the predatory credit card company practices. A leading opponent of this proposal is Congressman Jeb Hensarling (R-TX).

Jeb was asked why he thinks this bill would be a “Bill of Wrongs” and his reason was that this could lead to increased fees, annual fees and take away some of the credit card benefits. Jeb argues also that by limiting the interest rate terms a credit card company can give is prohibiting the ability of people with good credit records from paying less from those who don’t.

Ten years ago, a third fewer Americans had access to credit cards, they all had to pay annual fees and paid a high interest rate. What’s changed now is these credit card companies are in a competitive marketplace and can now offer some people with good credit records with lower rates. What Congress is essentially doing, according to congressman Jeb is take away the credit card company’s ability to price for risk.

There is however a problem with credit card companies engaging in unscrupulous practices using a bait and switch technique on introductory interest rates and high penalty fees. Often the disclosure with credit card companies is difficult to understand. At some point, it seems to some that this essentially becomes loan sharking and predatory lending.

We had usery laws at one point which prohibited companies from charging interest on top of interest. That has been done away with at the request of the 3 billion a year from lobbyists. These same lobbyists helped write the new bankruptcy laws of 2005 that makes it harder for Americans to file for bankruptcy. The top ten Credit card companies currently compose a 135 billion dollar industry.

Many proponents to this bill ask for better disclosure. No one fully understands their credit card terms and there should be more regulation here. But it doesn’t stop there. They still need to limit fees.