FED Cuts Rates by .75%…DOW Down 300+
In an emergency move, the Federal Reserve cut rates by .75% this morning in an attempt to keep the economy from sliding into recession. This is the first emergency rate move by the FED since September 2001 just after the 911 event.
Stock markets around the world took a beating yesterday on fears that the US economy and its pending recession will drag down other economy’s with it.
The DOW open down over 450 points during the first 5 minutes of trading but has recovered some of its losses to only be down just over 300 points at the time of this report. Continued weakness in the housing sector, slumping retail sales, and rising unemployment are continuing to point to a recession in our economy.
It also appears that Wall Street is not to impressed with our President’s stimulus package that would put a $650 check in the hands of many Americans. $650? Nice gesture but considering that Americans have now lost in excess of 15% of their net worth over the past several months with the fall in housing prices, and declines in their stock portfolios and retirement funds this meager amount will do most likely nothing to stimulate the economy…maybe it will be able to buy a couple of months of gast at the pumps…but that is about all it will do.
Don’t look for mortgages to drop too quickly…while the FED did cut rates today by .75%, don’t look for mortgage rates to move sharply lower in the next couple of days. The rise of foreclosures is placing a damper on pushing mortgage rates sharply lower.
Mortgage rates should move lower but not notably lower over the next several weeks. If continued weakness persist through February, look for 30 year fixed rate mortgages (conforming) to inch below the 5% mark for the first time in many years.
Maybe this will get the housing market to at least stabilize itself and eventually pick up some steam. I still believe that this is an excellent time to buy as housing prices continue to fal along with falling rates. Both sellers and buyers need to be more realistic in their views. Until this happens, housing will continue to suffer.
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Tags: DOW Jones, Federal Reserve, housing market, US economy
January 22nd, 2008 at 11:03 am
The $650 check is a proposal from our President, Mr. Bush that if accepted would send almost every working adult a check for $650 (would cost the U.S. about $150 billion dollars) to help stimulate the economy. The theory is that you will spend it which will grow the economy…don’t think this will get us out of the mess we are in right now…
October 12th, 2008 at 11:07 pm
The mortgage rate is showing, the government has done nothing to make it low. Now before the election they are showing they are doing many things to relieve us. This way nothing can be achieved. The means that government are using must be taken long ago. Still we can hope for the best. Any how the mortgage rate must come down.