The Federal Reserve surprised everyone Tuesday with an emergency intersession rate cut of .75%, the deepest cut in the Fed Funds Rate since 1984. The Fed Governors are acting in direct response to recent reports that the country is on the brink of recession.

For those that have credit cards, auto loans, or an Adjustable Rate Mortgage, the Fed's decision to cut this key interest rate .75% on Tues is great news. This is not necessarily a good thing for  long-term mortgage rates. We are currently at the lowest 30-year home loan rate since 2005.

When the Fed Funds Rate was cut in Oct to Dec of 01 by .75%, the rates rose .45% and when it was cut in May/Aug of 03 by .25%, the Home Loan Rates rose .78%. analysts are predicting another cut at the end of this month when the Federal Reserve meets.

Time to buy if you were waiting for long-term mortgage rates to fall.
 

2 Comments on Fed Funds Rate Cut

JAN
24
2008
217,287 Points Outside Blog

Whoo Hoo!  I love that it is an election year!  Too many people watching:) Now, if they would reduce the price of gas and heating oil, everyone would be much happier.

It's a Good Life!

Fran

7:42pm • #1

I think the government action is only going to make things worse in the future.  Sooner or later, it will be time to pay the piper for these artificially lowered interest rates.  Markets should work on their own...not by politicos fearing for their future. 

Same for gas and oil.  We need to drill for our own oil on our own land.  Scoot over moose/bear/elk....we need to get to the oil.

8:32pm • #2

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Gilbert, AZ

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