In an effort to shore up the failing housing market, the Federal Reserve announced today that they would be slashing the interest rate again, this time by three-quarters of a point, which is good news for those with fixed rate mortgages. However, despite the best efforts of the Fed, the rates don’t seem to be affecting mortgage interest rates for variable term loans, as these rates are going up.
There has been a lot of dissension among experts as to whether the rate cuts will truly help the situation, and provide a fixed rate mortgage alternative for those who need to refinance. Many suspect that the rates will soon be lowered even more. “I suspect they will still cut again,” says Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida. “There are significant risks with the economy … until the Fed feels credit markets are functioning again, they are going to lean towards stimulating the economy.”
The Fed has hacked away at the interest rate six times since September in an effort to slow what many people believe is a recession, while others are leaning more towards depression. While the news is good for fixed rate mortgage holders, it may take some time for it to affect those with variable interest rates.
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