Fed cuts interest rates to lowest level in 4 years

Attached is a link to an AP news article describing the Fed's latest .25 point rate cut. While this is good news for your credit card debt, car and boat loans and maybe even your Home Equity Line of Credit (HELOC) it is not neccessarily going to lower mortgage rates per se.  Mortgages are tied to rates like 10 Year Treasury Bills and ARMS are tied to things like the London Inter Bank Rate (LIBOR) and they are not lock step effected by the Fed funds rate.  So while the Fed cut rates yesterday a 30 year fixed rate mortgage was about 5.8% prior to the Fed announcement and lo and behold today the 30 year rate is......the very same 5.8%

Still any break in interest rates is welcome relief. The Fed is now "cautious" about inflation and so may not lower rates further. I would say with what is going on with the price of oil continuing to rise and with ALL that does to prices - I'd say the inflation fear is VERY well founded!

Here's a link to the article:

http://www.floridarealtors.org/NewsAndEvents/n4-050108.cfm

- Mike W.

Below is reprint of  a Washington Post Article from today announcing today's additional half point rate cut. While I believe this is additional good news for Real Estate and a step in the right direction do keep in mind that this does not instantly translate to lower mortgage rates as most mortgages are tied to the LIBOR (London Interbank Rate  - the rate banks charge each other for short term money) or they are tied to things like 10 Year Treasury Bills (T-Bills) so having the rate drop IS an indication of the government trying to inject money (credit) into the system but if you are currently locked into a rate in anticipation of closing on a NEW loan - you might ask about resetting before closing.

- Mike W.