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How Will the Rate Cut Effect the Condo Market?

Sep 18 by Frogman235        

OK...so I guess we have all heard by now that the Fed lowered the rate by half a point.  This is exciting news, right?!  In the short term thsi will definitely lower some people's mortgage payments and remove personal financial strain.  Obviously, this does not solve everyone's problems but it will at least free up some money for people. 

So where does this leave the housing market?  Most think that this will not really solve any immediate problems.  One thing to keep in mind however is that many people waiting to purchase condos have been waiting for this exact news...when will the Fed lower rates?  Well, now that they have, will we see some of these condo buyers come off the "fence" and make a purchase.  Now would be the time to lock into a reasonable long term fixed rate mortgage. 

Another questions to ask is "will there be another rate cut to follow this one"?  If so, it will most definitely brings some buyers out of the woodwork...at least we hope!  How will the lending institutions react to this?  There is no doubt the housing industry will now be slightly better off than it was before, but it will be interesting to see how much positive reaction comes from the rate drop.  We should expect to see some activity fluctuation over the next month as a direct result of this news.  We are already seeing great activity in the stock market!

Let's wait and see what happens...

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Tue, 09/18/2007 - 9:20pm — Schnitz44

I think that this will for

I think that this will for sure be promising news for the housing market. With the Dow closing up 335 points in one day, this was the single largest gain in 5 years! Mortgages, home equity lines of credit, auto loans, credit card rates, certificates of deposit, and money market accounts can all be influenced by changes in short-term interest rates set by the Federal Reserve. But, people need to remember that the only interest rate that will automatically drop is the federal funds rate, which is what banks charge each other on overnight loans. We learned this in macro economics 101. All other areas are in for some fluctuations, as Frogman indicated. With this in mind, the Fed's rate cut should provide a measure of relief to borrowers anticipating rising payments on their adjustable-rate mortgages.
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