Second Fed Rate Cut This Month

Second Fed Rate Cut This Month
For the second time this month the Federal Reserve has slashed key interest rates in hopes of stimulating the U.S. economy. Although the rate cut does not tie directly into mortgage rates, mortgage rates have been on a downward spiral for the past month.

One week ago the Federal Reserve slashed interest rates in emergency fashion by 0.75 percent and today they slashed interest rates by another 0.50 percent totaling a whopping interest rate cut of 1.25 percent this month alone.

The rate cuts show that the Federal Reserve is making every effort they can in an effort to avoid the U.S. economy from slipping into recession. Investors expect the key rate to reach as low as 2.5 percent when the Fed meets again in March.

This rate cut will more than likely have an impact on mortgage rates, which have fallen to their lowest level in over 4 years. With decreasing home values beginning to flatten this may be a good time for homebuyers to finally get into a home they can afford.

The real estate and mortgage industry have been governed to stricter credit criteria’s which have also added a security blanket for those looking to refinance or purchase a home. With lenders having to disclose income, assets and liabilities, consumers can feel more comfortable in knowing that the home loan that they are signing up for is something that is affordable for them now and in the future.

As always, it is recommended to shop around for mortgage products and mortgage rates to make sure you are receiving the best mortgage for your situation. When refinancing or purchasing a home make sure to ask questions and get all the information on how the loan can impact you not only today but 5, 10, 20 years down the road.

Submitted by admin on 1/30/08