December 17th, 2008

How Low Can You Go?



As expected, the Federal Reserve cut its key short-term rate yesterday; the Federal Funds rate is now a scant one-quarter of one percent. The Prime Rate is down to 3.25% — its lowest point since 1955.

What does it all mean? Our own Keith Gumbinger analyzes the move:

More important that any change in rate policy was the discussion in the release which provided comfort to the market that even with the Federal Funds Rate target near zero, the Federal Reserve still has plenty of ammunition available to influence the economy. Discussions of “quantitative easing” — geek speak for flooding certain markets with cash — is the Fed’s next likely course of action, and may take a variety of forms. … The Fed’s re-emphasis today is more important to the market than the change to short-term rates.

Mortgage rates don’t follow the Prime or Fed Funds rate, of course, but other financial pressures have been pulling them down lately. If you’re planning to buy or refi, we would advise you to move soon.

Read “Cost of Money? Priceless (almost)” here.

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About the HSH Blog's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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