As you may have heard by now the Federal Reserve made an unprecedented emergency rate cut this morning lowering the federal funds rate (this effects rates on credit cards, home equity lines of credit and auto loans) by .750%. While the lowering of short term rates typically do not have a major impact on 30 year mortgage rates, this morning it did. FHA rates have dropped to below 5.5% for a 30 year mortgage and conventional rates are down around 5.250% depending on credit score on loan amount.
Steve says that all of the sudden, you can get a 5 year conforming fixed for as little as 4.875%.
I spent the morning glued to CNBC trying to digest all that was going on. The bottom line?
There is no quick cure for what ails the U.S. and global economies, but if the Federal Reserve’s emergency interest rate cut Tuesday can instill some confidence among consumers, companies and investors, it may speed a recovery. Interest rate reductions take time to work, and they cannot undo the damage inflicted by the tumbling U.S. housing market and subsequent credit contraction that has curbed the flow of cash to households and businesses, pushing the economy to the brink of a recession.
For volatile world financial markets, the best hope is that the Fed’s efforts, coupled with a $150 billion fiscal stimulus plan that President Bush is planning, can coax cautious consumers and companies back to normalcy and shorten any U.S. downturn, limiting the strain on the global economy.
Between these rate cuts, and the number of times a day my phone is ringing with new inquiries and the dramatically increased showings on my listings, the bottom is probably closer than you think. NOW is the time to buy. Please let me know if you, a friend or family member needs to purchase or sell a home.