The FOMC cut the Funds Rate another 0.25% to 2.00% based on an 8-2 vote. Remember, this does not mean that the 30 year fixed rate is now 0.25% lower. This does mean that if you have a HELOC that is attached to Prime (and it’s not fixed), your rate will go down 0.25%. Prime will be reduced to 5.00%.
The FOMC also reduced the Discount Rate 0.25% to 2.25%.
The Fed Statement regarding today’s rate cuts will have a more dramatic impact mortgage rates (mortgage backed securities).
“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….
The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices…”
The 0.25% rate cut was highly anticipated and all ready priced into the market. We’ll see how bonds react once the markets have a chance to absorb the statement and Fed actions today. This week will remain very volatile with rates…tomorrow is loaded with economic indicators and Friday, we have the big daddy: The Jobs Report.
I want to take the time today to say how much I enjoy reading your posts. My preferred lender here in Atlanta is phenomenal for getting the job done, and service is outstanding. But, he doesn’t understand why I want him to write for me. You wouldn’t believe how often I quote your posts! Thanks for sharing with me.
Thanks Kathy! {seesmic_video:{“url_thumbnail”:{“value”:”http://t.seesmic.com/thumbnail/lNO990pHLy_th1.jpg”}”title”:{“value”:”Thanks Kathy! “}”videoUri”:{“value”:”http://www.seesmic.com/video/pgNrPTTwB4″}}}