With economy struggling to make a rebound, today the federal reserve cut the short term rate once again. What doe's this mean to the home shopper? The interest rates set for mortgages run off the LIBOR and with it not changing so wont the mortgage rates. This is for short term money, IE: Credit cards, car loans, home equity loans and the like. Until the BOND market changes look for rates to remain or even go up. Read on.
Federal Reserve's statement explaining decision to lower key interest rate one-quarter point
The Federal Reserve's interest rate statement Wednesday:
The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 2 percent.
Recent information indicates that economic activity remains weak. Household and business spending has been subdued and labor markets have softened further. Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.
Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high. It will be necessary to continue to monitor inflation developments carefully.
The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Gary H. Stern; and Kevin M. Warsh. Voting against were Richard W. Fisher and Charles I. Plosser, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 2- 1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Atlanta, and San Francisco.
Have we bottomed out in the decline of house values in the Phoenix area yet? One has to ask themselves as we are seeing a small but steady decline in listings and we are seeing more buyer activity in the past couple weeks than over the past couple months. Foreclosures are comming in at a steady stream, and now there is JINGLE mail arriving daily at the lenders mailbox. JINGLE mail?? That is where the buyers are walking away from there property and dropping the keys in the mail to the lender and saying here yah go have it back. Sad but true. Lenders on the other hand are being swamped with the declining house values and are working with clients to reset there loans and not walk away, we wish more people would try working with there lenders before walking, but alot of them just dont feel the lenders are willing to budge, but contrair some say. Before walking, at least give it a try, call your lender and be persistant.
On the other hand of the note is that,Bargains are being found for the sideliners that have waited for the bottom and are now being scooped up as fast as they hit the market. Intrest rates are low, terms are great and programs are available to first and second home buyers.
Short sales have become a problem, and that buyers are no longer willing to put bids in as the banks are dragging there feet so they say and the buyers sit and wait and wait, and then dont get the property. A short sale is a very time consuming option as appraisals must be ordered and verified, and investors must agree to release notes for pennies on the dollor and alot of negotiating must be done behind the scenes that new buyers are unaware of and so we are finding that the buyers are waiting for the properties to become bank owned and more easily negotiated and closed on more easily.
So the question still remains have we hit the bottom of the market here in Phoenix?
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