Federal Reserve Makes Drastic Rate Cut Based on Recession Fears

From everywhere it is being reported that the Federal Reserve today dropped its key interest rate from 4.25% to 3.75%. The largest drop since 1990! Fears of a coming (or present) recession in the United States was the apparent reason given for this large drop. With the sluggish housing market being played as a big part of the reason for the Fed's action.

Despite this move by the Fed, the stock market took a dive today.

The Fed hinted that future rate decreases are likely to occur in the near future. It will be interesting to see if this drop spurs a corresponding downward trend for mortgage interest rates. It has always been interesting to me that often when the Fed raises rates, the mortgage rates drop. And by the same token when they lower their rates, Freddie Mac reports an increase in average interest rates. In two days, 1/24/08, Freddie Mac will make its next report concerning average interest rates on mortgages in the US. Will be interesting to hear what they have to say.

All I know for sure is that at this point in time, prices for homes are the lowest they have been for years and interest rates are also at low levels. A good thing for buyers.

For more information or questions about this topic please call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com

I also invite you to visit my my website where I think you will find a lot of useful information. To get there just click on the following link: www.jelwell.century21bnr.com