Fed Cuts Interest Rate (Again)
For the second time in eight days and as expected, the Federal Reserve Bank cut short term interest rates today. This will bring the benchmark Federal funds rate to 3 percent. The Federal Open Market Committee which decides interest rates left open the possibility of further rate cuts.
Predictably, the stock market soared and one has to wonder if that has become the main driver of rate cuts since last weeks cuts have not yet had time to filter into the mortgage market. While eventually these most recent rate cuts will have a positive impact on mortgage interest rates, it is important to note that the real estate market does not swing in either direction the way the stock market is capable of doing.
Meanwhile, The New York Times, in an article on the economy Thursday, quoted Richard DeKaser, chief economist at National City Corporation as saying he was skeptical of the economy actually entering a recession. He cited the latest labor market data showing decreasing weekly unemployment claims and the fact that business borrowers are not facing a credit squeeze similar to that faced by the housing sector.
So, interest rates are nearing record low levels, real estate prices are down and there is plenty of inventory to choose from. What is your definition of a good time to buy a home?
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