Fed rate cut
Well, tomorrow’s the big day. The Fed is going to be cutting the federal funds rate, the only question seems to be will they drop .50%, .75% or possibly a full percentage point. These are certainly interesting times for rate watchers. The Federal funds rate doesn’t have much impact on mortgage rates, but it does have impact on other parts of the economy and that’s where the Fed wants to provide some stimulation.
What happens, though, when the Fed exhausts it’s ability to drop rates to provide economic stimulus? A full percentage point drop will put the federal funds rate at 2% and according to the government, we aren’t even in a recession. If this non-recessionary economy continues to worsen, that leaves the Fed with only 2% for future adjustments. Is that going to be enough? Who knows.
A lot of the U.S. economy is driven by consumer spending. With the home equity ATM closed, it’s highly unlikely the U.S. economy will be able to spring back quickly no matter what changes the Fed brings about. 2010 is a good possibility for the end of this non-recession, but I also wouldn’t be surprised if it went so long as 2011 or 2012. Just make sure anything you buy either cash flows or is at a very significant discount or you’re willing to keep it for awhile.
March 18th, 2008 at 7:49 am
[…] Fed rate cut Well, tomorrow’s the big day. The Fed is going to be cutting the federal funds rate, th […]
April 5th, 2008 at 9:14 pm
good analysis….!!
April 5th, 2008 at 9:18 pm
The mortgage rates are not changing much even after the cuts . Any thoughts..?
April 11th, 2008 at 7:06 am
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June 20th, 2008 at 7:34 am
It doesn’t seem to matter what the Fed does to try and help the housing market, as foreclosures are on a record rise. To see exactly what I mean check out http://governmentauctionsitereviews.com
June 26th, 2008 at 1:34 am
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June 26th, 2008 at 11:44 am
Well some of this is right, it really dont matter what the FED does to help the housing market, if people cant afford their home, there are still going to be foreclosures.
Before taking up a home loan it would be wise to study about the foreclosure terms in your loan, to avoid any future problems. I was facing a foreclosure nightmare some months back and a friend referred me to these guys mortgagebuyerbasics.com. They have a group of seasoned mediators who provide valuable assistance and help.
July 12th, 2008 at 3:01 am
The Fed will do what it does, but there are many opportunities for investment
I found this article and website to also be pretty on the mark.
http://pre.bestwaytostopforeclosure.info/permalink.php?article=Pre+Foreclosure+Leads.txt
August 5th, 2008 at 3:15 pm
I am very impressed with your article. I found alot of useful information within.
Thank you.
Barry
August 18th, 2008 at 10:36 pm
What will help borrowers more is the open line of communication they can create between mortgage lenders to let them know that they want to pay off their debt, but can’t.
Most foreclosures happen because the bank simply thought the borrower didn’t want to pay and left.
Dale
August 21st, 2008 at 5:15 pm
The way I understand it, the federal government will be repaid on the zero-interest, nonrecourse loans. Loans for homeownership properties would need to be repaid within two years, while loans used to create rental housing would have a maximum loan period of five years. Dave