Looks like the FED is even more aggressively using short term interest rates lowered beyond prior expectations to encourage business confidence and keep the wheels of commerce moving. The idea is to avert the lack of confidence about the economy being in or close to recession that can become a self-fulfilling prophecy. By lowering the short term interest rate the FED is creating an environment that should “entice” business activity where decision makers see an opportunity to “act” to make a purchase or close a deal with the expectation of a low cost of capital. For example, even though we know from prior posts on this blog that short term interest rates do not “directly” infuence long term mortgage rates, if the FED maintains short term interest rates low for some time, the supply and demand forces on money will lower mortgage rates. So the time is right for prospective home buyers with good credit to seriously begin looking at the cost of renting versus buying. And since there is currently a buyer’s market for homes, home buyers who are qualified by a lender and who are knowledgable about real estate conditions in their desired neighborhoods will be in an excellent position to make outrageously low offers and have them be accepted, without dealing with the multiple offer syndrome. But, this situation will not last. Once people start buying then the herd mentality will take over again and buyers will be dealing with a traditional market with obstinate sellers.
It is definitely the time to start talking with lenders who can offer guidance in maximizing buyers’ credit scores, and getting qualified with the best possible terms.
FED Funds rate
