The Fed Cut Rates!!!

Breaking News: The Fed Cuts Rates by Three Quarters of a Percent
What this may mean for you

The Federal Reserve slashed two key interest rates by three-quarters of a percentage point Tuesday following an unscheduled meeting, citing continued concerns about a weakening economy and turmoil in the financial markets.

So what does this mean for consumers?
The Federal Reserve lowered its federal funds rate to 3.5 percent from 4.25 percent, which impacts how much consumers pay on credit card debt, home equity lines of credit and auto loans,. This marked the biggest one-day rate move by the central bank since it cut its discount rate by a full percentage point in December 1991, a period when the country was struggling to get out of a recession.

The rate cut is designed to stimulate the economy, which includes the housing market, by:
Helping more individuals qualify for loans and increasing an individual’s purchasing power; and
Positively impacting home equity lines of credit.

How will the rate cut affect consumers?
The cut will affect consumers in a variety of ways:
Those who have home equity lines of credit that are tied to prime or short term Adjustable Rate Mortgages (ARM) could see an immediate reduction in their interest rate.
Those consumers who have adjustable rate mortgages that are tied to key indexes like the One Year Treasury Bill, 12-month Treasury Average and LIBOR Index may receive the benefit of this reduction as the indexes start to move lower in conjunction with lower rates.

What the lending experts are saying.
Robert Reid, the President and CEO for Mortgage Banker Princeton Capital released the following statement on Tuesday following the cut, “The rate cut bodes well for both home buyers and homeowners with adjustable rate mortgages. The cut also puts further downward pressure on mortgage rates. Rates have been moving down the last several months with the previous Federal Reserve cuts, so today’s action will continue this movement which increases home affordability. The conforming rates were at a two-year low prior to the cut and will likely decrease further which will help push jumbo rates down further as well. Lower rates increase affordability which should motivate more homebuyers to get into the market sooner rather than later.”

Based on interest rates and the current state of the economy, is now a good time to buy?
We believe this may be the time to buy a home, especially if owning a home is going to be a long-term commitment. Interest rates remain at attractive lows; this increases an individual’s purchasing power and makes the mortgage payment more manageable. In some areas, prices have softened as inventory has grown. All this is leading up to a very strong market for buyers.

If you have been thinking about buying or selling, now may be your best opportunity in more than a decade to do so. We would welcome the opportunity to counsel you on the opportunities available in today’s market and help you take advantage of them before it is too late.

Please call us today so we may get started.



Brian Malcolm & Monica Manocha Re, CMRS
The Malcolm & Manocha Group
www.mmgproperties.com
Direct: 408 399 1495 or Cell: 408 930 5623