The Fed Has Cut, Let's Go Shopping

Posted by Dave Fratello on Tuesday, September 18th, 2007 at 7:55pm.

Now that the Fed has made its move, -0.5% off their funds rate, the next move is up to home buyers.

Mortgage rates have already moderated since the early-August scare, though the rules for loan qualification remain tight at all levels. Only buyers with big cash down payments and good income & credit are going to have a fairly easy time getting the loans they want. Fortunately, we've got a few of those looking in MB.

If mortgage rates respond to the Fed, that's a nice discount and a reward for waiting. But mortgages need not track the Fed if there are other factors. Will they move in step? Something to watch.

There's euphoria on Wall Street today, but the Fed made this move out of worry. Coupled with the good news are warnings – of a recession, decline in the dollar and increases in long-term rates.

So the question is, how much does a rate ease impact psychology? We're getting our one-day answer now: Dow up 336 (+2.5%).
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