New York Times Fed Cuts

Refinancing applications are growing by leaps and bounds now with this recent set of FED rate cuts. NYT New York Times and the WSJ Wall Street Journal report that this is the highest number of mortgage refi applications since March of 2004. In fact, soon that number will be surpassed as well. Low rates and lots of real estate inventory in a buyer's market, might signal the best time to buy in several decades.

Over the past 25 years, in every quarter except one, American consumer spending rose over the previous year, according to a November BusinessWeek article. Consumers have continued to shop through both good and bad times. Access to easy credit has been responsible for this spending spree. BusinessWeek sees the subprime crisis as the "beginning of the end for the long consumer borrow--and buy--boom."

Alert! The Federal funds rate has been cut by three-quarters of a percentage point. Beware! This interest rate cut may or may not benefit you. Mortgage Holders If you are a home owner with an excellent 30-year fixed interest rate, it's a high probability you will not see a change that will support a reduction in your monthly mortgage. This is due to the fact that mortgage interest rates are not tied to the Federal funds rate. So, if you are sitting on a 5.25% 30-year fixed interest rate, you are already sitting pretty.

The Federal Reserve has cut interest rates several times over the last eight months in an attempt at boosting the economy. The relief the cuts were supposed to bring has not been felt and the concern is that the rates are about to rise while the economy is still, in what many economists consider, a precarious position. Should the economy show the slightest sign of recovery the Fed may decide to start increasing the interest rates.

The Federal Reserve has been all over the news the past few weeks as further fall out from the housing market continues to erode the credit markets. The stock market has seen dramatic rises and falls with companies facing bankruptcy due to restricted lending conditions in the secondary market. The Fed took a bold step in trying to address concerns regarding liquidity on Tuesday when they lowered the Fed Funds rate from 3% to 2.

On January 22nd, the Federal Reserve cut their most important interest rate for the fourth time in the past six months, in an attempt to stem the widespread sentiment that the US is in, or headed for recession. Their cut comes at a strange time, because they were rumored, nay, expected, to deliver the cut at their monthly rate-setting meeting next week. But after stock and commodity markets suffered their largest losses in one day since the September 11th attacks, it seemed as though no amount of scheduled economic treatment would be able to rally confidence to a more optimistic level, especially given that the so-called "economic stimulus package" introduced by the White House in recent days actually made the problem much worse.