Fed Cuts Rate Again

November 14, 2007

Prospective home buyers and mortgage borrowers received a boost from the Federal Reserve on July 31 when the Fed rate was cut by a quarter of a percentage point. This will help housing and the economy by stabilizing financial markets and increasing liquidity.

"By moving for the second time in as many months to ease its monetary policy, the Fed is taking prudent action to help American consumers and businesses," said Brian Catalde, president of the National Association of Home Builders. "The lower rate will bolster consumer confidence, keep the economy on a positive track and help the housing market recover."

A different "cautiously optimistic" spin to the rate-cut news is taken by Bankrate.com. "The lower Fed rate isn’t going to make housing all sunshine and daffodils overnight, and the Fed is keenly aware of that fact. It will take some time to weather the storm of the housing market. Fed rate cuts typically take six to nine months to completely filter through the economy."

The rate cut news is definitely positive for consumers, while average mortgage interest rates continue to stay at historically low levels - 6.33 percent as we move into November, with an average of 5.0 points (fees), according to Freddie Mac. Also, the number of mortgage refinance applications is increasing.

Posted in All Things San Diego, Lending, Local Business, Real Estate, Things of Interest