Most everyone agrees
that we are either at rock-bottom or close to it with regard to the real estate market. Most everyone also agrees that it
will be some time before we start upwards because there are so many listings on the market and more about to come on the market
in the form of foreclosures. So why would the Federal Reserve Board not lower rates to help the American homeowner? Lower
rates would help ease the increases in adjustable rate mortgages and help those who need to sell quickly or refinance.
The
first move from the Fed, lowering the discount rate, was clearly designed to calm the credit markets. One reason major lenders
are failing is that many can’t sell the loans they are making–especially those that are subprime. The calming
of the credit markets does help the real estate markets significantly. But it is not the same as lowering rates.
The first move from the Fed, lowering the discount rate, was clearly
designed to calm the credit markets. One reason major lenders are failing is that many can’t sell the loans they are
making–especially those that are subprime. The calming of the credit markets does help the real estate markets significantly.
But it is not the same as lowering rates.
Mortgage rates did go down this week because more economists are predicting further
moves by the Fed. From here, good economic news such as we saw on Friday in the form of orders of durable goods and new home
sales is actually bad news for the real estate market. If it looks like the economy is slowing, then the Fed will be more
likely to act. Before they meet again, economic releases will include an adjustment to the picture of second quarter economic
growth and the employment report for August.
Mortgage rates did go down this week because more economists are predicting further moves by the Fed. From
here, good economic news such as we saw on Friday in the form of orders of durable goods and new home sales is actually bad
news for the real estate market. If it looks like the economy is slowing, then the Fed will be more likely to act. Before
they meet again, economic releases will include an adjustment to the picture of second quarter economic growth and the employment
report for August.
