Fed lowers interest rate to help home buyers

According to Realtor Magazine, this recent cut in the federal funds rate may or may not be a blessing. If inflation worries continue to grow, fixed-rate mortgages may go up even though home equity lines, credit cards, and some car loan rates may go down.

The rate was cut from 5.25 to 4.75, and entire half point difference. However, the rates for homeowners with Adjustable Rate Mortgages may not show huge improvement because many are tied to the London Interbank Offered Rate (LIBOR). They need to also agree to lower their rates before these types of loans would be effected.

This article at the New York Times, “Will the Fed Reverse the Housing Slump?” explains things much better than I ever could, and discusses whether or not the Fed’s recent cuts will help the housing slump we are in.  

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