Will the Fed Cut Interest Rates?
Many analysts think that the Fed will cut interest rates by the end of the year. While some analysts think that this interest rate cut could take place as early as next month, some think that the first cut won’t come until October. But, as Inman News reports, the Fed move to cut interest rates is likely to come. And it may affect mortgage interest rates as well:
The federal funds rate is not directly correlated to mortgage rates, [NAR economist Kevin] Thorpe said, but NAR expects a federal funds rate cut would have a positive impact on housing markets.
“We believe there is pent-up demand in the marketplace right now,” Thorpe said. Adding liquidity to the marketplace would make it easier for prime and subprime borrowers to get a loan, Thorpe said, and “that should help demand translate into home sales.”
This means that it might be easier in a couple of months to get a home mortgage loan, and to get it at a better interest rate. Right now, with lending standards tightening, it can be difficult to get a home mortgage loan, even if you have good credit. And it is especially difficult to get a subprime loan, or to refinance to a second home mortgage. A home equity loan is harder to get as well right now.
Additionally, the extra liquidity provided if the Fed were to cut interest rates would also prove a boon for homeowners in trouble. It would help stave off foreclosure, and could keep the credit market — and the economy — afloat.
While interest rates don’t control everything about the economy, interest rates are significant players in how well the economy does. Especially in terms of home mortgage loans.
Tags: home equity loan, Fed cut interest rates, home mortgage loans, second mortgage,
Fed chair Ben Bernanke, mortgage interest rates, mortgage interest rate news
