Fed Cuts and you wonder what it means to you!?!

Mortgage and Lending

The Federal Reserve cut its overnight interest rate target by half a percentage point to 4.75%, citing turmoil in financial markets as a threat to economic growth. It also cut the discount rate by a half percentage point to 5.25%.


What does this mean for mortgage interest rates?  Fannie Mae rates have been improving all month in anticipation of this move, so not much happened today.  This does immediately lower all Home Equity Lines that are tied to Prime Rate by .5% !


This move will significantly help with psychology of the buyers and this is a great time to approach your buyers and let them know that this move should spur the market into more sales.


Call me if you want to discuss!


Special Fed Alert

"The long awaited Fed decision arrived with a bang! The Fed surprised many economists and traders with a half percent cut in both the Fed Funds and Discount Rates. Stocks soared higher and enjoyed their largest gain since 2003.

What does the Fed cut mean? Rates on consumer debt, car loans, and Home Equity lines will all benefit. But because Home Loan rates are tied more closely to inflation, it is not uncommon to see less of a reaction...or even an opposite reaction in mortgage rates.

The Fed cut also hurts rates of return on investments, which gives foreign investors less incentive to invest in US securities. This has sent the Dollar much lower against the currency of most major foreign countries. This makes foreign goods more expensive for us to buy, which adds to inflation pressures.

Overall, the Fed cut is good news for the economy, but may nudge inflation a bit higher."


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Andrew Trevino
ADT Real Estate - Wilkes Barre, PA
Wilkes-Barre Homes For Sale
Sounds like great news for my buyers. I'm excited!!
Sep 19, 2007 09:11 AM #1
Eric Sunsdahl
Citizens State Bank NYA - Norwood Young America, MN

And about time, we have been waiting for this for a long time now. Is it to late? We are getting a lot of apps but so many people are already behind on credit cards, car loans, etc. so its hard to do anything with the position that they are in.

On the bright side, this helps. Many people took out equity lines at 4-6% and are now paying 8-10%. Payments doubling hurts! Lets hope for some more cuts, at least this is a start.

Sep 19, 2007 09:35 AM #2
Christy Harvey
Keller Williams First Coast Realty - Orange Park, FL
I'm getting that, too. Lots of people who are in high debt.
Sep 19, 2007 09:43 AM #3
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