SEATTLE – The big three-quarter point interest rate cut made by the Federal Reserve Tuesday morning is expected to spur interest rate cuts for the rest of the public, but that might not include a drop in mortgage rates.

The sign of the times for Western Washington continues to be new homes going up, but interest rates have been going down, partly because of foreclosures around the country.

"It's been a pretty steep drop that we've seen in the last couple weeks," said Erik Hand, president of Bellevue-based Response Mortgage.

A typical fixed-rate, 30-year load will cost you about five and one half percent, and even a little less with a one-point origination fee.

Last summer, that loan was six and one-half percent.

Credit standards have tightened, but it will be tougher to qualify.

"It might take us 90 days to fully document their income and work out any issues they might have on their credit profile," said Hand.

With interest rates dropping, the re-finance business is picking up, but new home loans aren't moving quite as fast.  According to new information from the Northwest Multiple Listing service, prices in Washington continue to rise – up 5.9 percent.  Condos are up 10.6 percent. 

That means the median price of a home in the Seattle-metro area ranges from $455,000 in King county to nearly $300,000 in Pierce  County to nearly $400,000 in Snohomish County.  The highest is San Juan County at well over $500,000.

Last week, Sen. Patty Murray held a housing roundtable aimed at preventing foreclosure, especially since many adjustable rate mortgages will jump up this year.

Lenders are hoping for passage of federal legislation that will make more people eligible for federally backed loans now that most sub-prime lending has disappeared.

Hand says jumbo loans that are for $417,000 or more are a full percentage point higher than conventional loans, and those have not dropped as much because of the risk involved for the lenders.