Do we need further interest rate cuts?? FED Chairman seems to be on a cutting spree and likely continue to cut rates and probably keep cutting. However, it is a tricky game of allowing people to borrow (take on debt) to spend more to help an ailing economy.
In terms of real estate, we need further cuts to help a struggling real estate market as the 2% rate cuts have not impacted or significantly reflected in a drop in mortgage rates.
Are we headed to 0 % or ZIRP (Zero interest rate policy?)
Not since the 1930's, (after the Great Depression) have we had ZIRP monetary policy. However, I am hearing it more and more... and it may not be that far-fetched, since we have seen rates drop 2 points about 2 months, , another 2 ¼ points over the year is not much and would get us to 0%.
What is the net effect ?? we need lower interest rates (maybe not ZIRP) to stimulate the economy, housing and hopefully, get mortgage interest rates to move lower to stimulate the economy' .
However, its a Catch-22, as we have to be careful not to create another Real Estate Bubble with people buying more home than they can afford with these lower rates
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