Like the old saying goes, “if you live long enough, you are likely to see just about everything”. That was the first thing that came to my mind as I watched the Feds lower the ‘overnight rate’ yesterday to an unprecedneted 0-.25% rate. The government is using every possible tool at their disposable to try and get this country out of recession and I applaude them for it.
The Fed’s are making this rate cut in hopes of stimulating consumer and business lending which,in turn, should help the flow of many back into the economy. This cut should prompt home mortgages to continue their downward surge. They are currently around 5-5.25% and could trickle down in the four-range according to most experts. Wow!!!!
What does this mean for the Rutherford County real estate market? Lower mortgage rates in Middle Tennessee, hopefully, should encourage any renter that can buy-to buy. This will lower inventories which will help stabilize values. The lower rates will also encourage many homeowners to refinance their existing mortgage to lower their monthly debt burdens. In some refinance situations, the borrower may pull out some equity which they will put back into the economy.
Here is a great ‘Q and A’ article from the USA Today that really helps explain the Fed’s thinking.
http://www.usatoday.com/money/economy/2008-12-16-fed-rate-cut-qna_N.htm
Tuesday Morning Coffee 